With the arrival of this morning’s July trade data, it’s time to take stock of what’s happened to Canadian trade with the U.S. since President Trump launched the trade war.

Before we dive in, a quick refresher on what’s happened with tariffs.

President Trump took office on January 20th, and signed an executive order levying tariffs on Canada on February 1st. Trump’s so-called ‘Liberation Day’ on April 2 took the trade war global, with tariffs on multiple countries, but nothing new for Canada. Today, the U.S. effective tariff rate on Canada is lower than most other countries. The reason is that exports compliant with the Canada-U.S.-Mexico Agreement (CUSMA) are generally tariff-exempt with the exception of sector specific tariffs on steel, aluminum, autos, copper and lumber.

U.S. exports have dropped 

Exports to the U.S. surged in the first quarter of the year due to front-loading effects. That is, U.S. importers stocked up on Canadian goods to get ahead of tariffs. The second quarter saw a sharp reversal, as exports plummeted to the lowest levels since the pandemic. 

On a monthly basis, U.S. exports have bounced back from their April trough. However, they were still down 10% compared to the same time last year. And even with the surge in the first quarter, U.S. merchandise exports are down 2.9% year-to-date.

Exports to other countries have increased (but not enough to make up the difference)

A partial offset has come from increased exports to non-U.S. markets, which are up 14% so far this year. But, it’s not near enough to overcome the U.S. drop.

Overall, July export volumes (i.e. removing the impact of prices) were down 3.4% year-over-year, entirely reflecting the pullback in U.S. trade.