Canada's trade surplus widens to C$5.35 billion in September

A surplus carried by crude and gold

Statistics Canada reported on Wednesday that Canada's trade surplus widened to C$5.35 billion in September, from a revised C$4.95 billion in August. Economists surveyed by Bloomberg had expected C$5 billion.

The headline looks like Canada absorbing the tariff shock. It is not. Total exports rose 0.2 percent in September, but exports excluding energy and metal and non-metallic mineral products fell 5.6 percent, Statistics Canada said. Export volumes dropped 4 percent, the largest percentage decline since January. Eight of 11 product sections posted lower exports. The surplus says more about prices than about demand.

Energy exports rose 8.2 percent, as higher prices lifted shipments of crude oil and bitumen. Metal and non-metallic mineral products rose 8.6 percent, on higher US purchases of Canadian-held gold. Exports to the US increased 0.7 percent, and the bilateral surplus widened to C$12.3 billion from C$12.1 billion.

Imports fell 0.3 percent, and 2.5 percent in volume terms. Imports from countries other than the US dropped 1.4 percent, led by lower shipments from China, Japan and Mexico, mainly passenger vehicles and light trucks.

Shipments to the rest of the world went the other way. Exports to countries other than the US fell 1.1 percent, the second consecutive decline after a record high in July. Lower gold exports to the UK, coal and wheat to Japan, and diesel and wheat to Peru drove the fall. Higher copper, coal and crude oil shipments to South Korea partly offset it.

One month of data, two and a half months of tariffs

The US imposed 50 percent tariffs under Section 338 of the Tariff Act of 1930 on Canadian goods, effective 22 August. Ottawa answered on 8 September with counter-tariffs of 15, 25 or 50 percent on $27.6 billion of US imports. By economist Trevor Tombe's estimate, the tariffed goods amount to about 5 percent of Canada's exports.

September is the first full month of trade data since those levies took effect. The published accounts differ on how large the tariffed list is. The Hub and The Strand both put it at $27.6 billion. Bloomberg's report on the trade release describes Section 338 tariffs on $20 billion of Canadian goods in late August. The discrepancy is unresolved.

After Maine Sen. Susan Collins pressed for relief, Trump exempted 22 products from the 50 percent levy and added 100 new ones, effective 30 October.

Carney said on 28 October that Canada's negotiators are "not in that position right now" on a deal. Ottawa would sign only on terms in its interest, he said. A framework reportedly reached in Washington on 18 August would have cut US tariffs on Canadian autos to 15 percent from 25 percent. Steel and aluminium duties would have been halved to 25 percent. It did not survive.

Each side blames the other for the final hours. Carney said the US had tried to restrict Canada's ability to sign other trade deals, calling it a question of sovereignty. US Trade Representative Jamieson Greer told CBC News that Canadian officials had exaggerated the intrusion.

The 69.8 percent problem

Diversification is the other half of Ottawa's answer, and the data shows the distance left to cover. In August 2026, 69.8 percent of Canadian goods exports went to the US, up from 66.1 percent in July. That is a separate month from the September trade data above. Non-US exports fell 8.5 percent that month, to 30.2 percent of the total.

Carney has set a goal of doubling non-US exports within a decade, backed by a C$5 billion Trade Diversification Corridors Fund over seven years. A Fraser Institute study by Jock Finlayson and Steven Globerman concludes that the size and proximity of the US market will make that target very hard to hit.

Oil shows why the shift is slow. Global Affairs Canada says 97 percent of Canada's crude oil exports by value went to the US between 2015 and 2024. Pipelines and transport are built around that market.

Europe is the most visible alternative. European Commission President Ursula von der Leyen said on 29 October that she is discussing Canada becoming the first associate member of the EU. She said geography rules out full membership. EU capitals had rejected the term a day earlier, according to Politico.

China is the bigger prize on paper. It ranked third as an export destination in the first half of 2026, taking 5 percent of Canadian goods exports, behind the UK at 9.21 percent. The EU as a whole took 5.3 percent. Ottawa has also signed a strategic partnership with China, a trade agreement with Indonesia and investment and critical minerals deals with the UAE.

What happens next

Trump threatened on 24 August to raise tariffs on Canadian cars, trucks and auto parts to 50 percent starting 1 January 2027. That date now hangs over the part of the export base that is already shrinking.

The auto trade runs both ways, which is why the threat carries weight in Washington too. Carney has argued that Canada buys more American-built cars than the UK, Japan and China combined. US Census Bureau data show the US exported about $12.3 billion in passenger cars to Canada in 2025. That is roughly three times the $4.1 billion it sent to the UK, Japan and China combined. The Census figures include re-exports of foreign goods, so they do not measure American-built vehicles specifically.

September's import side offers one clue about how exposed the sector is. Total imports of motor vehicles and parts fell 9.1 percent as supply issues caused unplanned work stoppages in the US. Excluding that section, total imports rose 1.5 percent.

Canada's counter-tariffs on $27.6 billion of US imports remain in place. Von der Leyen and Carney are due to announce deeper EU-Canada cooperation at a summit in Montreal. Whether that produces anything more than a label is the open question.