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Canada’s trade deficit in April widened to an all-time high of a whopping $7.1 billion, data showed on Thursday, as tariffs imposed by President Donald Trump sucked out demand for Canadian goods from the United States.

Its exports to the rest of the world rose, but could not compensate for the drop in exports to the U.S., data from Statistics Canada showed.

Exports to the U.S. shrank by 15.7 per cent, a third consecutive monthly decline, Statscan said, adding that exports south of the border have fallen by over 26 per cent since the peak seen in January.

Analysts polled by Reuters had expected the trade deficit to widen to $1.5-billion for April. Statistics Canada also made a big revision to the trade deficit recorded in March to $2.3-billion from $506-million.

Canada shipped 76 per cent of its total exports to the U.S. last year and the trade between the two countries exceeded a trillion Canadian dollars for a third consecutive year in 2024. But a barrage of tariffs from Trump on Canada and its $90-billion worth of retaliatory tariffs on U.S. imports have started disrupting trade between the two.

Total exports in April plunged by 10.8 per cent to $60.4-billion, the lowest level seen in almost two years, Statscan said. This was the third consecutive monthly decline and the strongest percentage decrease in five years, it said.

While exports to the U.S. led the drop, lower crude oil prices and a stronger Canadian dollar also contributed.

The Canadian dollar was trading up 0.17 per cent to 1.3651 to the U.S. dollar, or 73.25 U.S. cents. Yields on the two-year government bonds were down 0.4 basis points to 2.613 per cent.

Exports to the rest of the world were up 2.9 per cent and in volume terms total exports registered a big decline of 9.1 per cent in April.

The biggest drop in exports came from motor vehicles and parts which lost 17.4 per cent of trade in April from March and was almost entirely attributable to exports of passenger cars and light trucks, which fell 22.9 per cent in April, Statscan said.

Imports were down 3.5 per cent in April to $67.58-billion, but were partly offset by imports of unwrought gold.

Due to the sharp decline in exports to the U.S., Canada’s merchandise trade surplus with the United States narrowed to $3.6-billion, the smallest surplus since December 2020, the statistics agency said.

The deficit with rest of the world marginally increased to $10.7-billion in April from $9-billion in March.

The Bank of Canada held its key interest rate steady at 2.75 per cent for the second consecutive time, citing ongoing trade uncertainty and an economy that continues to chug along.
 
The decision on Wednesday was in line with financial market expectations, which favoured a hold after recent strong-than-expected economic data.
 
“With uncertainty about U.S. tariffs still high, the Canadian economy softer but not sharply weaker, and some unexpected firmness in recent inflation data, governing council decided to hold the policy rate as we gain more information on U.S. trade policy and its impacts,” the central bank said in a news release.
 
The Bank of Canada held its key interest rate in April as well, pointing to the same trade uncertainty that contributed to its decision on Wednesday. The central bank is suggesting that economic data since then hasn’t fuelled urgency for rate cuts.
 
The elimination of the consumer carbon price brought down Canada’s inflation rate in April was 1.7 per cent, however underlying price pressures were firmer, with the central bank’s preferred measures of core inflation up that month. Meanwhile, the economy grew at 2.2 per cent in the first quarter, slightly higher than the Bank of Canada forecast as exports increased ahead of tariffs.

Toy maker Spin Master Corp. TOY-T says it has cut jobs across the company as it tries to weather the impact of global tariffs on its business. 

In an e-mailed statement, spokeswoman Tammy Smitham did not say how many employees were affected. 

She says the layoffs were one part of a multi-pronged plan to deal with the effect of tariffs, which also includes diversifying its supply chains and cutting costs. 

Spin Master said last month that U.S. tariffs on countries where it produces toys, especially China, have made forecasts so challenging that it withdrew its guidance for the remainder of the year. 

The company behind the Hatchimals, Gabby’s Dollhouse and Monster Jam brands has said it aims to drastically reduce its reliance on China for production over the next two years. 

In February, Spin Master said it had decided to wind down a games studio in Sweden as the cost to acquire new users weighed too heavily on revenue. 

U.S. private payrolls increased far less than expected in May, the ADP National Employment Report showed on Wednesday.

Private payrolls increased by only 37,000 jobs last month after a downwardly revised 60,000 rise in April.

Economists polled by Reuters had forecast private employment increasing 110,000 following a previously reported gain of 62,000 in April.

The ADP report, jointly developed with the Stanford Digital Economy Lab, was published ahead of the more comprehensive employment report for May due to be released on Friday by the U.S. Labour Department’s Bureau of Labor Statistics. There is no correlation between the ADP and BLS employment reports.

The labour market continues to ease amid economic uncertainty from tariffs. Government data on Tuesday showed there were 1.03 job openings for every unemployed person in April, little changed from March.

Private payrolls likely increased by 120,000 jobs in May after advancing 167,000 in April, a Reuters survey showed. Overall non-farm payrolls are estimated to have increased by 130,000 jobs after rising 177,000 in April.

The unemployment rate is forecast to be unchanged at 4.2 per cent.

Monday June 2

China PMI

Japan and Euro zone manufacturing PMI

(9:30 a.m. ET) Canada’s S&P global manufacturing PMI for May.

(9:45 a.m. ET) U.S. S&P global manufacturing PMI for May.

(10 a.m. ET) U.S. ISM manufacturing PMI for May.

(10 a.m. ET) U.S. construction spending for April.

(1 p.m. ET) U.S. Fed chair Jerome Powell gives opening remarks at International Finance Divisions conference.

Also: U.S. and Canadian auto sales for May

Earnings include: Campbell Soup Co.

—

Tuesday June 3

Euro zone CPI and jobless rate

(10 a.m. ET) U.S. factory orders for April.

(10 a.m. ET) U.S. Job Openings and Labor Turnover Survey for April.

Earnings include: CrowdStrike Holdings Inc.; Dollar General Corp.; Ferguson Enterprises; Hewlett Packard Enterprise Co.; Snowline Gold Corp.

—

Wednesday June 4

Japan and euro zone services and composite PMI

(8:15 a.m. ET) U.S. ADP National Employment Report for May.

(8:30 a.m. ET) Canadian labour productivity for Q1.

(9:30 a.m. ET) Canada’s S&P Global Services PMI for May.

(9:45 a.m. ET) Bank of Canada policy announcement with press conference to follow.

(9:45 a.m. ET) U.S. S&P Global Services/Composite PMI for May.

(10 a.m. ET) U.S. ISM Services PMI for May.

(2 p.m. ET) U.S Beige Book is released.

Earnings include: Descartes Systems Group Inc.; Dollar Tree Inc.; GameStop Corp.; Northwest Co. Inc.; Transcontinental Inc.

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Thursday June 5

ECB monetary policy meeting

(8:30 a.m. ET) Canada’s merchandise trade balance for April.

(8:30 a.m. ET) U.S. initial jobless claims for week of May 31. Estimate is 236,000, down 4,000 from the previous week.

(8:30 a.m. ET) U.S. productivity for Q1. The Street expects an annualized rate decline of 0.7 per cent with unit labour costs rising 5.7 per cent.

(8:30 a.m. ET) U.S. goods and services trade deficit for April.

(10 a.m. ET) U.S. global supply chain pressure index for May.

Earnings include: Broadcom Inc.; Enghouse Systems Ltd.; Lululemon Athletica Inc.; Rupert Resources Ltd.; Saputo Inc.

—

Friday June 6

China foreign reserves

Japan household spending

Euro zone retail sales and real GDP

Germany industrial production and trade surplus

(8:30 a.m. ET) Canadian employment for May. The Street expects a drop of 0.1 per cent, or 17,500 jobs, with the unemployment rate rising to 7.0 per cent from 6.9 per cent and average hourly wages rising 3.2 per cent year-over-year.

(8:30 a.m. ET) U.S. nonfarm payrolls for May. Consensus is a gain of 130,000 jobs with the unemployment rate remaining 4.2 per cent and average hourly wages up 0.3 per cent sequentially and 3.7 per cent from the same period a year ago.

(3 p.m. ET) U.S. consumer credit for April.

• A federal appeals court granted the Trump administration’s request to temporarily pause a lower-court ruling that struck down most of President Donald Trump’s tariffs.
• The administration had told the U.S. Court of Appeals for the Federal Circuit that it might seek “emergency relief” from the Supreme Court.
• Trump officials including Peter Navarro and Stephen Miller heaped criticism on the trade court judges following their ruling.

https://www.cnbc.com/2025/05/29/blocked-trump-tariffs-trade-court-appeal.html

Oil prices were steady on Friday and headed for a second consecutive weekly loss, as investors weigh a potentially larger OPEC+ output hike for July, and uncertainty spreads around U.S. tariff policy after the latest courtroom twist.

Brent crude futures fell by 18 cents, or 0.28 per cent, to US$63.97 a barrel by 9:08 a.m. ET. U.S. West Texas Intermediate crude fell by 18 cents, or 0.3 per cent, to US$60.76 a barrel.

The Brent July futures contract is due to expire on Friday. The more liquid August contract was trading 33 cents lower, or 0.5 per cent, at US$63.02 per barrel.

At these levels, the front-month benchmark contracts were headed for weekly losses over 1 per cent.

Price moves dipped into negative territory after Reuters reported that OPEC+ may discuss an increase in July output larger than the 411,000 barrels per day that the group had made for May and June.

“The oil price would probably only come under greater pressure if the oil-producing countries were to increase their production even more than in previous months or give indications that there will be similarly high production increases in the following months,” Commerzbank analysts said earlier on Friday in a note, published before the news.

The potential hike comes as the global surplus has widened to 2.2 million barrels per day, likely necessitating a price adjustment to prompt a supply-side response and restore balance, said JPMorgan analysts in a note, adding they expect prices to remain within the current range before easing into the high US$50s by year-end.

U.S. President Donald Trump’s tariffs were expected to remain in effect after a federal appeals court temporarily reinstated them on Thursday, reversing a trade court’s decision a day earlier to put an immediate block on the sweeping duties.

Oil prices were down more than 1 per cent on Thursday.

The appeals court’s decision pushed Brent to the bottom of its recent tight range, Investec’s head of commodities Callum Macpherson said.

Oil prices have lost more than 10 per cent since Trump announced his “Liberation Day” tariffs on April 2.

Also pressuring prices, U.S. consumer spending slowed in April, according to data published on Friday.

Canada’s economy in the first quarter grew faster than expected, data showed on Friday, primarily driven by exports as companies in the United States rushed to stockpile before tariffs by President Donald Trump.

But an increase in imports that led to inventory build-up, lower household spending and weaker final domestic demand indicate that the economy was battling on the domestic front. Economists have warned that as tariffs continue on Canada, this trend will persist.

The gross domestic product in the first quarter grew by 2.2 per cent on an annualized basis as compared with the downwardly revised 2.1 per cent growth posted in the previous quarter, Statistics Canada said.

This is the final economic indicator before the Bank of Canada’s rates decision on Wednesday and will help determine whether the central bank will cut or stay pat on rates.

Currency swap markets were expecting around 75 per cent chance the bank would hold its rates at the current level of 2.75 per cent, before the GDP data was released.

Markets, economists shift predictions on next week’s BoC rate decision after GDP report surprises to the upside

Trump’s repeated threats and flip-flops on tariffs since the beginning of the year led to an increase in exports and imports to and from the U.S.

Trump imposed tariffs on Canada in March, first on a slew of products and later specifically on steel and aluminum.

The GDP grew by 0.1 per cent in March after a contraction of 0.2 per cent in February. The economy is likely expected to expand by 0.1 per cent in April, the statistics agency said referring to a flash estimate.

The March growth was primarily driven by a rebound in the mining, quarrying, and oil and gas extraction and construction sectors.

Analysts polled by Reuters had expected the first quarter GDP to expand by 1.7 per cent and by 0.1 per cent in March.

The quarterly GDP figure is calculated based on income and expenditure while the monthly GDP is derived from industrial output.

The tariffs and the uncertainty around them started showing early signs of impact as the final domestic demand, which represents total final consumption expenditures and investment in fixed capital, did not increase for the first time since the end of 2023, Statscan said.

Growth in household spending also slowed to 0.3 per cent in the first quarter, after rising 1.2 per cent in the prior quarter.

The first quarter growth was led by a rise in exports, which jumped by 1.6 per cent after increasing by 1.7 per cent in the fourth quarter of 2024. Business investment in machinery and equipment also increased by 5.3 per cent which pushed the quarterly GDP higher.

Royal Bank of Canada RY-T -3.47%decrease reported higher second-quarter profit that missed analysts’ estimates as the lender sets aside more money for potential loan defaults with trade concerns dragging on consumers and businesses.

RBC earned $4.39-billion, or $3.02 per share, up 11 per cent from the same quarter last year.

Adjusted to exclude certain items, including integration costs related to the purchase of HSCB Bank Canada, the bank said it earned $3.12 per share. That fell below the $3.20 per share analysts expected, according to S&P Capital IQ.

The bank raised its quarterly dividend by 6 cents to $1.54 per share. RBC also said it plans to buy back 35 million of its shares.

Canada’s largest bank is telling its employees to return to their offices four days a week. The new rules take effect in the fall.

RBC to require employees to work in the office four days a week

RBC is the final major Canadian bank to report earnings for the fiscal second quarter. Over the past week, Toronto-Dominion Bank, Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank of Canada posted results that beat analyst estimates,while Bank of Nova Scotia’s profit missed expectations.

Analysts expected Canada’s banks to continue grappling with higher loan loss reserves activity as U.S. President Donald Trump’s trade war threatens a deeper economic downturn.

In the quarter, RBC set aside $1.42-billion in provisions for credit losses – the funds banks reserve to cover loans that may default. That was higher than analysts anticipated, and included an increase in performing loans, or debt that is still being repaid, to $568-million, based on models that use economic forecasting to predict future losses.

In the same quarter last year, RBC reserved $920-million in provisions.

“Changes to long standing U.S. and international trade policies have resulted in a volatile and uncertain operating environment, given the potential for structural disruptions to the global supply chains and capital flows,” RBC chief executive officer Dave McKay said during a conference call.

“But we can’t say for certain where global trade policies will settle. We are cautiously optimistic about the path forward.”

Profit from personal and commercial banking was $1.6-billion, up 14 per cent from a year earlier, driven by earnings from HSBC Canada and higher net interest income.

The commercial banking unit earned $597-million, up 3 per cent from a year earlier, bolstered by profit from HSBC Canada.

The wealth management division generated $929-million of profit, up 11 per cent on higher fee-based client assets.

Capital markets profit fell 5 per cent to $1.2-billion as higher trading revenue in global markets was offset by lower merger and acquisition activity in corporate and investment banking.

“Performing PCLs were higher than consensus (conservative provisioning is a positive) and RBC is one of the few banks that did not beat on trading revenue (we are okay with that),” CIBC analyst Paul Holden said in a note to clients.