Canada's Trade Deficit Widens Sharply in November as Gold Shipments Fall -- 2nd Update

By Robb M. Stewart

OTTAWA--Canada's trade deficit ballooned in November as gold shipments remained volatile and vehicle movements fell, though there again were early signs the country is diversifying away from its dependence on the U.S.

Canada recorded a merchandise-trade shortfall of almost 2.2 billion Canadian dollars, the equivalent of about US$1.62 billion, Statistics Canada said Thursday. That was much wider than the C$690 million deficit economists expected and October's downwardly revised C$395 million gap.

Including services, Canada swung to a trade deficit of C$2.19 billion from a small C$27 million a month earlier.

After rising the previous two months, goods exports declined 2.8% between October and November. That was largely thanks to a slump in gold shipments, though Canadian exports of precious metals remained up almost 40% over the first 11 months of 2025 thanks to the surge in demand for gold and run of record-breaking prices. Stripping out metal and mineral products, exports increased 2.5% for the latest month.

Automobile exports declined as car and light truck production was hit by a semiconductor shortage, while shipments of heavier trucks and buses sank nearly 54% following the introduction of fresh U.S. tariffs on these products from the start of November.

The value of merchandise coming into Canada dipped 0.1%, mainly due to weaker prices. A rise in imports of consumer goods including pharmaceutical and medicinal products moderated declines in inbound shipments of motor vehicles and parts and of energy products.

The pullback in exports, which in volume terms declined 0.9%, and strength in imports with a rise of 0.9% from the month before on a volume basis, points to a headwind from net trade for economic growth. Statistics Canada on Friday will release monthly industry-level gross domestic product figures, having previously estimated the economy eked out 0.1% growth month-over-month in November following the sharpest contraction in October since the end of 2022.

Canada has been hit hard by U.S. tariffs and uncertainty and the central bank this week forecast the economy likely stalled in the final quarter of last year as exports continued to be buffeted by the Trump administration's trade policy. The Bank of Canada, which left its policy interest rate unchanged a second time in a row, projects an only gradual pick up in growth over this year and next.

Economists expect exports to remain under pressure from U.S. tariffs, at least near term as businesses await the outcome of the upcoming review of the existing North American trade pact. While sectoral tariffs like those on steel and aluminum continue to weigh heavily on Canadian industry and have dampened business sentiment, exemptions under the U.S.-Mexico-Canada Agreement continue to shield the bulk of exports to the U.S. from levies.

Shipments of Canadian goods to the U.S. were down 1.8% in November, a second straight decline that leaves exports over the first 11 months of 2025 down 4.9% versus the same period last year. For the month, 68% of Canadian shipments headed to the U.S., up modestly but still below historical levels.

At the same time, imports from the U.S. fell 5.4% to the lowest level since February 2022. That meant about 56% of all merchandise coming into the country came from the U.S., the lowest share on record outside early in the pandemic in 2020.

Canadian imports from countries other than the U.S. increased 7.8%, to an all-time high, driven by a range of goods from China and Germany and pharmaceuticals from Belgium. After surging nearly 28% from August to October to a record, exports to countries other than the U.S. fell 4.9% in November, dragged lower by a strong fall in gold to the U.K. and Hong Kong.

"We continue to see tentative signs of Canada successfully diversifying its trade away from the U.S.," Alexandra Brown, North American economist at research firm Capital Economics, said.

In an effort to pivot Canada away from a reliance on the U.S. and strengthen the economy's resilience, Prime Minister Mark Carney is targeting a doubling of non-U.S. exports over the next decade. Carney has made a number of trips in recent months to countries including in Europe and the Middle East, as well as to China, in an effort to warm relations and boost trade.

The latest data shows Canadian goods exports to China rose 8.8% during November, while imports were up 9.1%.

The shift in trade saw Canada's longstanding surplus with the U.S. widen to C$6.58 billion from C$5.23 billion the month before, while the deficit with all other countries deepened to C$8.78 billion from C$5.63 billion.

Write to Robb M. Stewart at [e-mail]

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