Canada just saw its biggest trade surplus since its leaders pledged to shed its US reliance. Statistics Canada (StatCan) data shows international merchandise trade jumped in April. A sharp climb in exports produced the biggest trade surplus in over a year, though it wasn’t due to policymakers. The net gain was more than explained by energy exports, driven by soaring oil prices and an increased reliance on US trade.
Canada’s Trade Surplus Hit A 15-Month High
Canada’s merchandise trade surplus widened to $2.7 billion in April, up from $1.8 billion in March. This marks the largest surplus since January 2025, with a 1.6% m/m rise in exports against a 0.3% rise in imports. These are really solid numbers at the macro level.
A trade surplus can be driven by falling imports, masking an economic erosion. Weaker imports signal declining demand, which is often bad news. But that’s not what we’re seeing here—imports grew, exports just grew faster.
That’s the good news. The less flattering read from the data doesn’t tell a story of a more competitive economy, but one returning to where it used to be.
Oil Prices And Commodity Swings Did A Lot Of The Work
The energy squeeze caused by the war in Iran did most of the heavy lifting last month. Energy exports surged 9.7% in April, following a 23.4% surge in March. Crude was the driver here, rising 7.0% over the period due to higher prices, rather than higher volumes. StatCan warns that this data will be more prone to revisions than usual due to price volatility.
At the same time, April’s import growth still left it weaker than April 2023. Since that comparison is in current dollars, the inflation-adjusted gap would be even larger.
The read here is that this print was due to soaring commodity prices due to the Iran War, not growth driven by the economic prowess of decision makers. That’s not a jab at economic diversification plans, but a reminder that this growth is vulnerable to reality. When external factors drive growth, they also determine when that growth ends.
Canada’s Economic Dependence On The US Deepens
Canada’s trade balance with the US, in Canadian dollars.
Source: StatCan; Better Dwelling.
Canada’s return to the biggest surplus since before policymakers pledged to diversify the economy isn’t a coincidence. Canadian exports to the US climbed 4.8% in April, marking the third straight month of growth. Rising crude prices and passenger vehicles drove the surplus, which hit $9.5 billion. It was the biggest surplus since February 2025, when leaders pledged less trade with the US. Banging the drum of diversification helped secure a mandate, but we’re back to where we started. Um, cool…
Soaring Demand From China Is Easing Canadian Trade Woes
Exports of Canadian goods to China, in Canadian dollars.
Source: StatCan; Better Dwelling.
Exports to all other countries fell 4.8% in April, while imports of non-US goods fell 1.5%. This widened the trade deficit with non-US countries to $6.8 billion, lower than it would have been without soaring Chinese demand. However, it remains a deficit and with exports falling over 3x the rate of imports, future narrowing may be a little choppy.
Canada’s trade performance got some breathing room, but it was due mostly to energy prices and the US. Policymakers—and the brave taxpayers footing the bill—pledged to diversify trade and industry. Fast forward a little over a year since that pledge was made, and the headline data improved. However, the Iran War’s boost to crude prices and Canada’s renewed dependence on US trade are driving that headline “growth.” Canada just discovered the longest, most expensive way to do nothing.
