New data released this morning show that the ongoing trade war with the U.S. is weighing on Canadian exports, particularly in highly tariff-exposed sectors. After a jump in the first quarter, mainly due to front-loading effects, total merchandise exports have pulled back. As of August, they were down 5.5% from last year.

Sectors facing substantial U.S. tariffs have experienced the most significant impact through August. These tariffs include 35% on softwood lumber, 50% on steel and aluminum, 50% on autos (for content non-compliant with CUSMA), and 50% on certain copper products.

While detailed trade data with six-level product codes won't be available until later, preliminary figures indicate that the exports of metal, forestry, and automotive products have plummeted to multi-year lows. We will dig deeper into the trade trends for these specific goods once the detailed trade data is released.

Overall, Canada’s exports to the U.S. were down by 3.3% year-to-date (YTD) through August, leading to the widest trade deficit on merchandise goods with the U.S. ever recorded for the first eight months of a year. This trend is consistent with the ongoing trade disputes between the two countries since Trump assumed office in January.

The Alberta story

Alberta's trade patterns to the U.S. mirror the national trend, with exports down 4.6% YTD, but primarily due to lower energy prices rather than sectoral tariffs.

Conversely, Alberta has seen stronger growth in sales to non-U.S. destinations, with a 25% surge through August. China is the largest market in this category, followed by Hong Kong and Singapore. This growth is largely driven by energy exports, which totaled $3.3 billion to just these three countries over the first eight months, representing a threefold increase from the same period last year.

Despite these encouraging numbers, the U.S. continues to be the dominant international market, accounting for over 85% of Alberta's merchandise exports. As a result, total merchandise exports were down by 1.5% compared to the first eight months of last year.

Looking ahead, rising oil and natural gas production is expected to continue to partially offset the impact of lower energy prices. Our outlook anticipates a modest 2.5% increase in real oil and gas exports, while non-energy exports are expected to remain subdued this year.

Answer to the previous trivia question: The first oil pipeline was built in Canada in 1862. It moved oil from the Petrolia oilfields to Sarnia, Ontario.

Today’s trivia question: What is Thanksgiving called in Quebec?