Canada deficit surges by nearly $20 billion to all-time high of $21.16 billion in Q2
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Canada’s trade imbalance blew wide open in the second quarter of 2025, ballooning by C$19.84 billion to hit a record C$21.16 billion, according to Statistics Canada. That’s the largest current account deficit ever recorded. The plunge came as goods exports collapsed and foreign capital rushed out. The current account includes trade, cross-border services, investment income, and transfers, and right now, every piece is flashing red. Exports of goods fell 13.1%, the steepest quarterly drop in years, dragging total export values to the lowest since 2021. Canada’s trade deficit in physical goods also hit a record C$19.60 billion. The damage was mainly from a slump in shipments to the United States, Canada’s biggest trading partner and now its biggest problem. Trump’s tariffs hammer exports, car shipments plunge The economic hit came after U.S. President Donald Trump reimposed sweeping tariffs on Canadian goods, targeting steel, aluminum, and automobiles. That decision, announced in late Q1, began biting hard in Q2. Canadian exports to the U.S. collapsed, dragging the broader export numbers with them. Total exports shrank by 7.5%, reversing earlier gains made in Q1. The hardest fall came from international sales of passenger cars and light trucks, which tanked by almost 25%. The ripple effect hit GDP. The Canadian economy shrank 1.6% in the quarter on an annualized basis. That’s nearly three times worse than the 0.6% contraction economists were expecting in a Refinitiv poll. This followed a 2% drop in the first quarter, meaning Canada has now posted two straight quarters of contraction, meeting the textbook definition of a recession. Nathan Janzen, assistant chief economist at the Royal Bank of Canada, said the headline numbers were “obviously weaker than expected.” He blamed a “huge” drop in exports and a sharp decline in U.S. imports. “Trade-exposed sectors have weakened and business investment fell,…
Filed under: News - @ August 31, 2025 11:19 pm