Canada's trade deficit was 2.69 billion Canadian dollars (about 2.1 billion USA dollars) in February, surging from 1.94 billion Canadian dollars in January as rail transport problems cut exports of wheat and canola, according to Statistics Canada Thursday.
Canada's trade deficit in February jumped to C$2.69 billion ($2.10 billion) from C$1.94 billion in January as rail transport problems slashed exports of wheat and canola, Statistics Canada said on Thursday.
While President Donald Trump has vowed to shrink the trade deficit, it may keep growing thanks to rising household spending, strong business investment and tax cuts that are boosting demand for imports. The Institute for Supply Management said earlier this week that the tariff announcement helped send a measure of raw-material prices paid to an nearly seven-year high in March, as businesses began stocking up.
However, the value of imports also increased by 1.7% to USD262.0 billion due to the royalty payment for the Olympics as well as higher imports of capital goods, industrial supplies and materials, and foods, feeds, and beverages.
February imports were $262.0 billion, $4.4 billion more than January imports.
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Several categories of iron and steel imports showed gains in February, according to the trade report. Exports rose to US$204.4 billion, led by industrial supplies and materials, vehicles and capital goods.
There were also lower shipments of unwrought gold to Britain in the month. Exports increased $22.4 billion or 5.9 percent. As a result, the trade surplus with the United States fell to 2.58 billion Canadian dollars in February from 2.93 billion Canadian dollars in January. The White House is seeking to cut $100 billion, or about 25%, from the annual deficit with China. Still, the overall economic growth is on track to expand 1.4 percent in the March quarter.
The rise in imports was broad based, driven by a 15 percent rise in energy products to the highest level since late-2014.
Despite the rebound in export volumes, the trade deficit remains disappointing given the strong US economy and weak Canadian dollar, said Royce Mendes, senior economist at CIBC Economics, in an email note to clients.
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