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A worker affixes a steel coil to a truck at ArcelorMittal Dofasco’s steel mill in Hamilton.Cole Burston/Getty Images
Canada’s trade surplus hit a four-year high in May as the conflict in the Middle East buoyed oil and other global commodity prices and aluminum exporters found new markets.
Merchandise exports rose 0.9 per cent, the fourth consecutive monthly increase, to a record $77.1-billion, Statistics Canada reported Tuesday. Imports declined 0.2 per cent.
That pushed Canada’s trade surplus with the rest of the world to $4.2-billion, from an upwardly revised $3.4-billion in April. That’s the largest trade surplus since May, 2022, and the second largest surplus since the summer of 2008, just before the global financial crisis.
Meanwhile, Canada’s trade surplus with the United States widened to $11.6-billion from $10.3-billion in April, the largest surplus since January, 2025, when Canadian companies tried to front-run President Donald Trump’s incoming tariffs.
The run of strong export data in recent months has been driven by the spike in global oil prices, caused by the U.S.-Iran war and the closing of the Strait of Hormuz to oil tanker traffic. After posting a towering $5.3-billion trade deficit in February, Canadian exports have jumped 22-per-cent over four months, leading to a string of trade surpluses.
Most of the increase has been driven by higher prices, not greater shipment volumes. In real (price-adjusted) terms, exports in May were essentially flat.
“Canadian trade surpluses can come and go quickly with swings in oil prices, and this is probably the high watermark for now,” Bank of Montreal senior economist Robert Kavcic wrote in a note to clients. “Still, net exports look to add firmly to growth in Q2, another data point that suggests the Canadian economy has snapped out of its two-quarter funk.”
Since Washington and Tehran announced a peace agreement in mid-June, the price of a barrel of West Texas Intermediate crude has fallen to around US$70 – well below the US$90 to US$110 range in May.
Canadian energy exports actually declined 2 per cent in May compared to April. However, this was more than offset by a 16-per-cent increase in metal ores and non-metallic mineral exports, led by a jump in sulphur exports.
“This increase occurred in a context of constrained global supply, as sulphur shipments transiting through the Strait of Hormuz have slowed since the conflict in the Middle East began,” Statistics Canada said.
Aluminum exports rose 50.7 per cent to reach $1.2-billion, the highest export value since May, 2022. This increase was led by shipments to the Netherlands, Italy and Greece.
The aluminum market has been upended by U.S. tariffs on the metal as well as the closing of the Strait of Hormuz. Around 10 per cent of global aluminum production comes from countries in the Persian Gulf and aluminum prices rose sharply this spring.
Beyond increased aluminum shipments to Europe, there were few signs of the federal government’s trade diversification agenda in the May numbers. Exports to the U.S. rose 1.5 per cent, the fourth consecutive monthly increase.
Exports to the rest of the world declined 0.3 per cent, after a sharp 4-per-cent drop in April. Most of the trade diversification story over the past year has been about higher gold prices and greater gold shipments to the United Kingdom. This has slowed in recent months.
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Overall, exports rose in seven out of 11 categories, including consumer goods, chemical, plastic and rubber products, and food products.
Imports declined 0.2 per cent in May, driven by a large drop in the value of metal imports, including gold, iron and steel and scrap metal. Looking beyond metals, imports actually increased in nine out of 11 sectors.
“Trade flows continue to be shaped by uncertainty surrounding U.S. trade policy, although our broader expectation remains that trade will become less of a drag on Canadian growth than it was in 2025 as the international environment gradually stabilizes,” Royal Bank of Canada economists Abbey Xu and Nathan Janzen wrote in a note to clients.
“The recent CUSMA joint review did little to change our base-case outlook that North American trade rules will remain broadly intact, though negotiations are likely to remain an important source of uncertainty,” they wrote, referring to trade pact between Canada, Mexico and the United States.
Last week, the Trump administration opted not to extend the trade agreement for another 16 years. The deal remains in place but moves into a period of annual reviews until 2036. Trade negotiations among the three countries are expected to continue over the summer.