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Transport trucks carry cargo containers at a port in Vancouver. In October, only 67 per cent of Canadian exports went to the U.S., a record low excluding the pandemic.DARRYL DYCK/The Canadian Press
Canada swung back to a trade deficit in October as imports grew at a faster pace than exports, though early signs suggest that the country is starting to diversify its trade partners, with a heavy assist from soaring gold prices.
Canada imported $66.2-billion worth of goods in October, up 3.4 per cent from September, Statistics Canada said Thursday, while exports rose 2.1 per cent to $65.6-billion. The faster growth in imports pushed the trade balance from a $243-million surplus in September to a $563-million deficit in October. Analysts had been expecting a larger deficit of $1.5-billion.
Canadian exports have been on a volatile ride this year, owing to substantial U.S. tariffs that have targeted several key industries, including steel, aluminum, autos and lumber. Exports to the United States fell 4.1 per cent in the first 10 months of 2025, compared with the same period a year earlier.
At the same time, Canada appears to be finding new markets for its goods. Exports to other countries rose 15.6 per cent in October to a record high, Statscan said, led by higher shipments of gold to Britain and crude oil to China.
In October, only 67 per cent of exports went to the U.S., marking the lowest share on record in Statscan data going back to 1997, excluding the initial months of the pandemic.
“While some evidence of diversification can be seen in the data, trade flows will continue to be under pressure as tariff and geopolitical uncertainty remain elevated,” Shelly Kaushik, senior economist at Bank of Montreal, wrote in a note to clients.
While some Canadian industries face hefty U.S. tariffs, the vast majority of goods can still flow south of the border duty-free. This has helped to blunt the damage to Canada’s economy from U.S. protectionism.
Still, the outlook is highly uncertain. Canada is facing a review of the North American free-trade deal with any number of outcomes – from a renewal of the trilateral pact to a U.S. withdrawal from the agreement.
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The U.S. Supreme Court is also set to rule on the legality of various of U.S. President Donald Trump’s tariffs, including the so-called “fentanyl tariffs” on Canada, Mexico and China, which cover just a sliver of Canadian trade with the United States.
“Canadian exporters remain challenged by U.S. tariffs and uncertainty around the Canada-United States-Mexico Agreement renegotiations, and likely won’t see a sustained improvement in activity until that uncertainty fades further into 2026,” Katherine Judge, senior economist at CIBC Capital Markets, said in a research note.
Because of U.S. protectionism, Canadian policy makers are trying to find new markets for its goods. Prime Minister Mark Carney will visit China next week – the first trip by a Canadian prime minister in more than eight years – to boost trade and investment, before heading to the Middle East.
In a report, Capital Economics said exports to China jumped 28.4 per cent in October, reflecting stronger crude oil shipments.
Imports, meanwhile, bounced back after a 4.3-per-cent drop in September. Electronics and electrical equipment led this rebound with an increase of 10.2 per cent. Computers and computer peripherals climbed more than 32 per cent to a record high, driven largely by processing units from Ireland.
Communication, audio and video equipment also increased, supported by stronger smartphone shipments from China and the U.S.
After a 27.5-per-cent decline in September, imports of metal and non-metallic mineral products rose 9.5 per cent in October, as purchases of unwrought gold, silver and platinum group metals soared. Industrial machinery, equipment and parts also grew 5.7 per cent.
Although exports took a hit in 2025, those figures have been improving since the spring and summer, when Mr. Trump was implementing many of his signature tariff policies.
“We continue to believe that the peak negative impacts from tariffs are in the rear-view mirror especially as consumers and businesses adopt to the new normal,” Toronto-Dominion Bank economist Marc Ercolao wrote in a client note. “The path forward is still subject to significant risk, notably the upcoming and complex review of the USMCA agreement.”
