Canada’s trade deficit with the world increased in January as the number of vehicles exported to international markets dropped more than 20 per cent, according to the latest data.
Statistics Canada says total exports in January fell 4.7 per cent from December 2025, which was the largest monthly decline since April 2025. At the same time, Canada’s imports fell 1.1 per cent, which ballooned the trade deficit to $3.6 billion compared to $1.3 billion a month earlier.
A trade deficit happens when an economy imports more than it exports, while the reverse is a trade surplus, as was seen in September.
Motor vehicle exports dropped by 21.2 per cent, which was one of the biggest declines among product categories. Six out of 11 sectors saw exports fall in January.
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Exports of passenger cars and light trucks specifically fell 32.5 per cent in the month to $5.4 billion, which Statistics Canada says was the lowest level since September 2021, and due to lower motor vehicle production in Canada.
U.S. President Donald Trump’s administration has imposed a 25 per cent tariff on all Canadian-made vehicles and parts, in addition to sweeping tariffs on virtually all countries.
These tariffs have increased costs for some customers in the U.S., which is where the vast majority of Canadian-made vehicles and parts are shipped.
In January, General Motors laid off hundreds of workers in Ontario.
Manufacturing job losses totalled 28,000 in January, according to a separate report from Statistics Canada, and the unemployment rate hit 6.5 per cent across all job sectors.
Aircraft and other transportation equipment parts saw exports fall 16 per cent after posting much stronger numbers in previous months. Much of the aircraft exports had been Canadian-made private jets from companies like Bombardier.
Exports of metal and non-metallic mineral products fell eight per cent in January, which includes raw gold, silver and platinum group metals and alloys, after rising nearly 18 per cent in December.
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