OTTAWA – Canada’s merchandise trade deficit increased to $3.6 billion in January as exports of motor vehicles and parts fell to their lowest level since September 2021, Statistics Canada said Thursday.
The result compared with a trade deficit of $1.3 billion in December.
Katherine Judge, executive director and senior economist at CIBC, said the deficit widened dramatically in January, but the details of the report were a little less negative than the headline suggested.
“While the data adds to evidence that the Canadian economy started 2026 on shaky ground, real exports are likely to make up some lost ground ahead as auto plant retooling ends,” Judge wrote in a report.
“Beyond that, however, the renegotiation of CUSMA remains important in order to maintain the U.S. tariff exemption, as sectors hit by U.S. tariffs are still seeing depressed export volumes, with little evidence of diversification being seen.”
Statistics Canada said total exports fell 4.7 per cent in January to $62.5 billion, the largest percentage decline since April 2025.
The drop came as exports of motor vehicles and parts fell 21.2 per cent to $5.4 billion in January as exports of passenger cars and light trucks plunged 32.5 per cent, mainly due to lower motor vehicle production.
Statistics Canada noted that changes in the models produced resulted in prolonged seasonal production stoppages in January, which strongly affected exports.
Meanwhile, total imports in January fell 1.1 per cent to $66.1 billion as imports of motor vehicles and parts decreased 4.5 per cent.
Imports of electronic and electrical equipment and parts also fell 3.6 per cent in January, while imports of industrial machinery, equipment and parts rose 3.4 per cent.
In volume terms, total exports fell 5.8 per cent, while imports dropped 2.2 per cent.
Looking at the results regionally, Canada’s merchandise trade surplus with the U.S. was $5.4 billion in January compared with $5.7 billion in December, while exports to the U.S. fell 3.8 per cent and imports from the U.S. dropped 3.4 per cent.
Canada’s trade deficit with countries other than the United States was $9.0 billion in January compared with $7.0 billion in December.
Statistics Canada said when international trade in goods and services were combined, Canada’s total trade deficit with the world was $3.8 billion in January compared with $860 million in December as exports fell 3.9 per cent and imports edged down 0.4 per cent.
In a separate report, Statistics Canada said wholesale sales fell in January as the motor vehicles and motor vehicle parts and accessories subsector stepped back.
The agency said wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, dropped one per cent to $85.2 billion.
Statistics Canada has started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade, but is excluding the data from its monthly analysis until there is enough historical data for comparison.
This report by The Canadian Press was first published March 12, 2026.
