January 2025 monthly trade report: Office of the Chief Economist

Highlights

• In January, Canada’s exports of goods and services rose 4.1% (see column “m/m” in Table 1) driven by higher exports of industrial machinery and equipment, motor vehicles, consumer goods, energy, and transportation services.
• Imports of goods and services were up 1.7% month-over-month. Higher goods imports, particularly in aircraft and other transportation equipment, offset lower service imports.
• Both Canadian exports to the United States and Canadian imports from the United States rose, with export growth across many sectors, including industrial machinery and equipment, pharmaceuticals, autos and energy. Meanwhile, 2-way trade with markets outside the United States fell.
• The increases were largely driven by trade volumes, as prices posted more modest growth. Goods’ export and import volumes grew at 4.5% and 1.5% respectively.

Table 1: Canada’s trade performance – January 2025

Figure 1: Canada’s monthly trade performance

Industry view - exports

Export increases were observed in 9 of the 11 product categories for goods, and in 1 of the 4 service sectors in January. Total goods exports increased 5.5% from December 2024 to January 2025, with industrial machinery & equipment leading this growth at 12.6% because of higher shipments to the United States.

Exports of motor vehicles and parts products grew 12.5% month-over-month to reach a record high of $9.0 billion in January. This was driven by an increase of 17.1% in exports of passenger cars and light trucks, reaching their highest level since May of 2019. Exports of energy products grew 4.8% with crude oil exports (2.9%) and natural gas exports (28.7%) leading this growth. This is largely due to higher prices resulting from the combination of low crude oil inventories in the United States and colder weather, boosting demand for natural gas. Exports of consumer goods also rose 7.8% in January after a large decrease of 22.8% in December. In contrast, exports of chemical, plastic & rubber products saw the largest decrease of 2.0% in January.

Total services exports declined 1.1% in January to $17.7 billion, largely due to travel service exports decreasing 3.2% and commercial services decreasing 0.4%.

Figure 2: Exports by industry and sector (monthly % change)

Industry view - imports

Imports increased in 9 of the 11 product categories for goods but in only 1 of the 4 service sectors in January.

Aircraft & other transportation contributed the most to the overall gain in imports, rising $521 million (or 23.6%), month-over-month. Imports of energy products also grew 8.5% while electronic and electrical equipment and parts were up 5.8% in January.

Metal & non-metallic mineral products as well as consumer goods partially offset the gains in other goods categories as they declined $316 million and $209 million (or 5.6% and 1.4%) respectively in January.

Total service imports declined by 0.4% in January to $18.5 billion. Travel services recorded the largest month-over-month services decline, falling by $273 million (-5.3%), largely due to lower spending by Canadian residents travelling in the United States. This was followed by transportation services which dropped $22 million or 0.7%. Imports of commercial services grew 2.2% in January, mainly due to increased imports of financial services.

Statistics Canada continues to caution that the import data may be subject to more significant revisions than usual during the transition to a new data collection approach.

Figure 3: Imports by industry and sector (monthly % change)

Global markets

Continuing the strong momentum observed in November and December, goods exports to the U.S. rose 7.5% month-over-month in January reaching a record of $58.2 billion. This export growth was experienced broadly across many sectors including industrial machinery and equipment, pharmaceuticals, energy, and automotive products. This increase in exports to the United States coincided with the threats of tariffs on imports entering the United States. Similarly, goods imports from the U.S. increased 4.7%.

Goods exports to countries other than the United States fell 1.0% in January, reversing the December increase. This decrease was due to lower exports of gold and aircraft to Switzerland, coal to South Korea, and various products to Germany. These decreases were a little more important than the notable increases in exports of canola as well as other products to China. Goods imports from countries other than the United States also decreased 1.4% in January, mainly due to lower imports from the European Union. As a result, Canada’s trade deficit with countries other than the United States narrowed from $10.6 billion in December to $10.4 billion in January.

Figure 4: Goods trade by main markets (monthly % change)

Prices and volumes

Canadian goods export volumes rose 4.5% in January, the largest monthly growth since February 2024. Exports price growth was steady but relatively more subdued, growing 1.0% in January; this was the smallest growth since September 2024. As a result, this is the first month that exports volume outpaced price since September. Goods import volumes grew 1.5% in January, the largest since June 2024; meanwhile, import prices rose 0.8%.

The price of Western Canadian Select (WCS) gained 8.8% in January, largest monthly growth since April 2024. On the other hand, the Canadian dollar depreciated 1.0% to US 69.49 cents; this was the fourth consecutive monthly decline, and it fueled price growth in both imports and exports in January.

Figure 5: Goods trade (monthly % change in volume and price indices)

Figure 6: Exchange rate & oil prices

What to watch

• On March 6^th, the United States indicated they were pausing broad-based 25% tariffs on Mexico and Canada (10% on Canadian energy, that came into force on March 4th) for goods compliant under CUSMA until April 2.
• The United States administration has indicated that they will implement a 25% tariff on all steel and aluminum imports from the world on March 12; these would stack on top of existing tariffs.
• The United States Department of Commerce will deliver a report to President Trump about other countries’ trade practices with the United States on April 1. President Trump has indicated that the administration will then implement reciprocal tariffs on April 2.
• The Federal Reserve Bank of Atlanta revised their United States real GDP growth forecast for the first quarter of 2025 to negative 2.8%, citing a plateau in personal consumption and fixed investment.

Next release: April 3, 2025

Table 2: Trade by industry sector – January 2025

Table 3: Goods trade by main markets – January 2025