Posthaste: Canada’s gaining ground in overseas trade — too bad it’s a head fake

Canada now has seven months of trade data under its belt since U.S. President Donald Trump launched his

tariff war

on Liberation Day last April.

No doubt the president has been pleased to see America’s

trade deficit

shrink to the smallest in a decade, while exports from its main trading partners, Canada and Mexico, have dropped considerably from a peak in February.

To make up for this, Canada’s federal government wants to double exports to countries other than the United States within the next decade.

So how are we doing?

On the surface it looks like we are gaining ground.

Exports to destinations outside the U.S. climbed to 33 per cent in October, the latest trade data tells us, up from less than a quarter of business in 2024.

“While this appears a welcome development, there’s perhaps more to it than meets the eye,” said National Bank of Canada economists Ethan Currie and Stefan Marion.

A breakdown of the data reveals most of those gains are due to

gold, the price

of which has surged 70 per cent since last January. As its price soared, so did the value of exports.

“That is then predominantly a function of price impacts … suggesting that true, volume-based trade diversification away from the U.S. is perhaps not making the strides it appears to be on the surface,” said Currie and Marion.

Precious metals accounted for about 13 per cent of Canadian exports in October, for the time on record beating exports of oil and autos, two heavy-weight sectors now under pressure from lower prices and Trump’s tariffs, said Shelly Kaushik, senior economist with BMO Capital Markets.

After rising almost 33 per cent in September, gold shipments surged another 47.4 per cent in October, almost double the increase recorded at the same time last year.

About 60 per cent of this gain was because of higher prices, but volumes also rose about 40 per cent from last year, according to National Bank.

Without gold, international shipments would have fallen by 2.5 per cent, but the yellow metal is also making Canada’s trade position appear better than it actually is, said National Bank senior economist Jocelyn Paquet.

Canada’s merchandise trade balance swung from a surplus in September to a $0.58 billion deficit in October, a shortfall that was better than economists expected. Without gold, that deficit would have deepened to $8.2 billion.

“Therefore, it is fair to say that the explosion in prices and demand for the precious metal is partly masking the effects of tariffs imposed by Washington in the trade data,” said Paquet.

Trade diversification is a good goal, the economists say, but right now Canada’s economic fate depends on renewing the preferential treatment under the

Canada-United States-Mexico Agreement (CUSMA). 

“Longer-run, effective, and sustained trade diversification … can not properly materialize in the absence of a renewed, confidence-bolstering deal, and the associated private capital investment,” said Currie and Marion.

The three countries are scheduled to renegotiate the agreement this year, but Trump set an ominous tone this week when he

called CUSMA “irrelevant”

and said it has “no real advantage” for the United States.

For now we still have gold — which has served the economy well.

Precious metals have helped boost everything from mining companies to the stock market this past year.

“While Canada’s trade flows will continue to face headwinds amid geopolitical uncertainty, gold will remain a stalwart as long as prices hold up,” said BMO’s Kaushik.

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Canada’s mining sector is booming as gold, silver and copper hit new records — the only thing it lacks is miners.

Employment in mining and quarrying has climbed to a record 100,000 workers nationwide during this boom and the jobless rate in the sector is 2.6 per cent, vastly lower than the industry-wide rate of 6.2 per cent.

Mining leaders say they are already feeling the impact of the tight labour market, especially for skilled workers. Companies have been forced to pause production, delay projects and cut output forecasts because of the shortages.

“In the next 10 to 20 years, we’re going to want to expand significantly, but we’re going to come up against this labour constraint, which is already being felt,” said Gustavo Jurado, senior economist at the Mining Industry Human Resources Council.

“And it’s going to get worse.”

Read more from the Financial Post’s Andrew Rankin

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• Earnings: Goldman Sachs Group, Blackrock Inc., Morgan Stanley, JB Hunt Transport Services Inc.

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• Skilled labour shortage is tapping the brakes on Canada’s mining boom
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A B.C. couple with three young children are thinking ahead to retirement, but expenses of about $10,000 a month including $2,200 in mortgage payments don’t leave much room for savings. They need a plan that will help them retire at age 60 with an income of $100,000 after tax.

Find out what Family Finance has to say.

Interested in energy? The subscriber-only FP West: Energy Insider newsletter brings you exclusive reporting and in-depth analysis on  one of the country’s most important sectors.

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McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s

Financial Post column

can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his

mortgage rate page

for Canada’s lowest national mortgage rates, updated daily.

Financial Post on YouTube

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Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at 

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