With new international trade data up to the end of March released this morning, all eyes are on what impact U.S. tariffs have been having.

Overall, Canada’s merchandise exports were at an all-time high in the first quarter of 2025 at $214 billion and were 12% higher than the same quarter in 2024.

Year-over-year (y/y) sales to the United States jumped 14% in the first quarter to $166 billion, also setting a new record for sales value.

Canada’s exports to the rest of the world, meanwhile, improved by a more modest 5%.

This sounds like good news for the Canadian economy—and it was—but the quarterly improvement masks the dampening effects of tariffs.

Keeping in mind that it is difficult to isolate tariff impacts from the many other moving parts affecting trade, the monthly data help explain what has been going on.

In a nutshell, it looks like American buyers were front-loading purchases from Canada in January and February to get ahead of the tariffs (see the tariff timeline below).

Canadian sales to the U.S. rose by 22% y/y in January and by another 12% y/y in February.

Then, with U.S. tariffs (albeit with exemptions) in place in March, exports to the U.S. grew by just 2% y/y.

So what can we expect going forward?

On the one hand, it looks like (keeping in mind things can change quickly) Canada will be getting off easy compared to the U.S. tariffs on other countries due to the exemptions under the Canada-United States Mexico Agreement. To the extent that there are higher tariffs on goods coming into the U.S. from countries other than Canada, this provides us with a competitive advantage.

On the other hand, there are currently $60 billion worth of Canadian tariffs on U.S. goods that are raising costs for Canadian buyers; U.S. tariffs on specific products like steel and aluminum and softwood lumber are extremely problematic for affected industries and consumers; there are likely more U.S. tariffs to come (including on the Canadian film industry); Chinese tariffs on Canadian products are harmful to Canada’s agricultural sector; and the general friction from tariffs and the uncertainty surrounding them are harmful to economic growth in general.

Putting this together, we will have to wait for more data to better assess the full impact of the tariffs on trade, but we can expect the negative consequences to increase the longer tariffs are in place and the more of them that are imposed.

First quarter U.S.-Canada tariff timeline:

• February 1 - Blanket U.S. tariffs on Canadian goods starting February 4 announced; Canadian counter-tariffs announced
• February 3, 2025 - Both countries announced they will pause their tariffs for 30 days
• February 10, 2025 - U.S. steel and aluminum tariffs starting March 12 announced
• March 4, 2025 - Tariff pause ends
• March 6, 2025 - U.S. announced exemption for March 4 tariffs on imports from Canada satisfying CUSMA rules of origin requirements; Canadian tariffs on $30 billion worth of U.S. goods remain in place
• March 12 - U.S. steel and aluminum tariffs go into effect; Canada retaliates with tariffs on an additional $30 billion worth of U.S. goods including steel and aluminum
• March 26 - U.S. announced auto tariffs (with exemptions) to take effect in April

Answer to the previous trivia question: The population of Kitimat, B.C. is about 9,000.

Today’s trivia question: Which city had the larger population as of July 1, 2024: Grande Prairie or Medicine Hat?