Canada Records First Trade Surplus in 10 Months

Canada achieved a notable economic milestone in December 2024, reporting a merchandise trade surplus of C$708 million. This represents the nation’s first goods-trade surplus with the world in 10 months. The driving force behind this positive outcome was a sharp increase in energy exports, primarily destined for the United States, Canada’s largest trading partner.

Energy Exports Surge to the United States

Canada’s energy sector played a pivotal role in December’s trade performance. Energy exports to the U.S. surged by an impressive 9.5%, with crude oil being the standout contributor.

• In 2024, total energy exports from Canada reached C$176.2 billion.
• A significant 88% of these energy exports were directed to the U.S.

This growing reliance on the U.S. for energy trade underpins the importance of maintaining favorable trade relations between the two nations.

Canada’s Expanding Trade Surplus with the U.S.

Canada’s merchandise trade surplus with the United States widened substantially in December, reaching C$11.34 billion, up from C$8.19 billion in November.

• For the full year of 2024, Canada recorded a robust merchandise trade surplus of C$102.3 billion with the U.S.
• However, this figure was slightly narrower than the C$108.3 billion surplus reported in 2023.

This strong trade relationship, particularly in energy products, continues to deliver positive economic outcomes for both nations.

Trade Deficit Widens with Non-U.S. Countries

While Canada’s trade performance with the U.S. was strong, trade deficits with other countries expanded.

• In December 2024, the trade deficit with non-U.S. nations increased to C$10.6 billion, up from C$9.2 billion.
• For the entire year, Canada posted an overall merchandise trade deficit of C$7.2 billion, a significant increase from the C$610 million shortfall in 2023.

This imbalance underscores the challenges Canada faces in diversifying its trade partnerships outside of North America.

Economic Gains with Looming Uncertainty

The energy export boom contributed to a strong quarterly economic performance, with real exports rising by 2.7% in Q4 of 2024. However, conditions could change as the potential for U.S. import tariffs in 2025 introduces new risks.

• Tariff threats could create heightened volatility in Canadian exports and imports.
• This uncertainty may dampen Canada’s economic growth prospects going forward.

U.S. Benefits from Canada’s Energy Trade

The United States gains significantly from its energy trade with Canada. By importing Canadian crude oil, the U.S. can export lighter oil at higher prices, reaping a financial advantage. This trade dynamic delivers an annual windfall of US$19 billion for the U.S., further affirming the mutual benefits of cross-border trade in the energy sector.