Gold-Fuelled Import Surge Widens Canada’s Trade Gap to $5.7 Billion

Why It Matters

The widening deficit pressures Canada’s GDP and underscores the volatility of precious‑metal flows, while the growing non‑US export share hints at a strategic move away from over‑reliance on the United States.

Key Takeaways

• Gold imports up 45.6%, driving trade deficit expansion
• Total imports $72.1 bn CAD (~$52.6 bn USD), exports $66.3 bn CAD (~$48.4 bn USD)
• Auto exports jump 24.2%, reflecting production rebound
• US trade surplus shrinks to $1.7 bn CAD (~$1.2 bn USD)
• Non‑US exports rise 10.5%, led by gold, agri‑products

Pulse Analysis

The February trade data reveal that Canada’s most striking anomaly was a 45.6% surge in gold imports, which alone added roughly $4 bn CAD to the merchandise deficit. Global investors have been flocking to the metal as a hedge against geopolitical risk, and Canadian dealers sourced the bulk of the bullion from the United States. Because balance‑of‑payments rules treat such transactions as imports even when the physical metal does not cross the border, the statistical impact is amplified. This gold‑driven import spike pushed the overall deficit to $5.7 bn CAD, far exceeding analysts’ $2.25 bn forecast.

Beyond precious metals, Canada’s import bill rose 8.4% to $72.1 bn CAD, driven by higher purchases of motor‑vehicle engines, parts, and energy products such as crude oil and aviation fuel. On the export side, the rebound in auto production after January’s shutdown translated into a 24.2% jump in vehicle shipments, while metal and agricultural goods also posted double‑digit gains. Notably, the trade surplus with the United States contracted to $1.7 bn CAD, its smallest since 2020, as non‑US markets absorbed a record $22.3 bn CAD in exports.

Economists warn that the enlarged deficit will act as a drag on first‑quarter GDP, reflecting a classic restocking effect after the 2025 drawdown. However, the data also suggest a gradual diversification of Canada’s export basket, with gold, canola and other agri‑products gaining traction in Europe and China. Higher oil prices, spurred by Middle‑East tensions, are expected to boost energy‑related exports in the coming months, potentially narrowing the overall trade gap. Policymakers will likely monitor the balance‑of‑payments impact of precious‑metal flows while encouraging broader market access.