Canada Records $1.78 Billion Trade Surplus in March on Higher Oil Prices and Gold Exports

Canada reported a merchandise trade surplus of 1.78 billion Canadian dollars in March, equivalent to about 1.31 billion U.S. dollars, marking a significant shift from the 5.11 billion Canadian dollar deficit recorded in February. The turnaround was fueled by higher crude oil prices amid the war in Iran and surging global demand for gold, which boosted export values.

Statistics Canada released the data on Tuesday, noting that total exports climbed 8.5% to 72.8 billion Canadian dollars. Analysts polled by Reuters had anticipated a deficit of 2.88 billion Canadian dollars, making the surplus an unexpected positive development.

Excluding energy and metal products, exports grew modestly by 1.1% in value but declined 0.3% in volume. The Canadian dollar strengthened slightly by 0.03% to 1.3620 following the release.

Energy exports surged 15.6% to their highest level since September 2022, propelled by a 24% increase in the metal and non-metallic product category, which reached a record high despite falling gold prices. Motor vehicle and parts exports rose 4.5% in March, building on a 24.9% gain in February, with higher shipments of passenger cars and light trucks contributing to the uptick.

These gains occurred even as overall export volumes outside key categories showed minimal growth. The war in Iran has elevated crude oil prices, directly lifting the value of Canada's energy shipments. At the same time, global demand for gold helped offset price declines in the precious metal, leading to robust export performance in that sector.

Statistics Canada highlighted these factors as central to the monthly surplus, the first in six months.

Exports to the United States increased 8.3% to 48.51 billion Canadian dollars, the highest in a year, driven by higher crude prices and vehicle shipments. Imports from the United States fell 1.2% to 41.44 billion Canadian dollars, resulting in a trade surplus with the U.S. of 7.1 billion Canadian dollars, the largest in six months.

However, the share of Canada's total exports going to the U.S. dropped to 66.7%, its lowest level ever. This shift comes amid ongoing trade tensions, as President Donald Trump has imposed tariffs on Canada to address the U.S. trade deficit with its neighbor.

Exports to countries other than the United States rose 9.1% to a record high, while imports from those countries decreased 2.2%. These changes underscore a diversification in Canada's trade flows away from its largest partner.

Money markets are now pricing in two 25 basis point interest rate cuts by the Bank of Canada by the end of the year, reflecting expectations of continued economic adjustments. The surplus contrasts with recent deficits and highlights how external factors like commodity prices and geopolitical events influence Canada's trade balance.

Statistics Canada data indicates that barring energy and metals, underlying export trends remain subdued, suggesting potential vulnerabilities if global conditions shift. Officials noted that the record exports to non-U.S. markets could signal a strategic pivot in trade strategy.

Overall, the data points to a volatile but improving trade environment for Canada in early 2026.