Canada's merchandise trade deficit swelled to a record $4.1-billion in March, as solid exports were outpaced by even stronger growth in imports - evidence of improving economic momentum despite the widening trade gap, economists said.
Exports of aircraft and other transportation equipment and parts rose 24.3 per cent in March to $2.3 billion, while farm, fishing and intermediate food products increased 14.7 per cent to $2.8 billion.
The politically sensitive goods trade gap with China dropped 11.6% to $25.9 billion, with exports to China jumping 26.3% and imports from China down 2.1% in March.
The Commerce Department said the trade deficit narrowed to $49.0 billion in March from a revised $57.7 billion in February.
But even without a NAFTA deal nailed down, Canadian exporters may be starting to make up for lost time amid a healthy and growing US economy, which is by far Canada's biggest export market.
More broadly, the USA trade gap has widened this year, increasing 18.5% in the first three months of 2018 compared with the same period a year earlier.
The Trump administration argues that the perennial trade deficit is holding back economic growth. Even though the negotiations over China's trade practices hasn't become a full-fledged trade war, it looks like the country has already stopped buying American soy, according to a report from Bloomberg.
The 2018 first-quarter goods trade deficit with the world is up $24.4 billion compared to the $172.4 billion first-quarter global goods deficit in 2016, the past year of the Obama administration.
So too were higher exports to Britain (unwrought gold), South Korea (aircraft) and Japan (copper and coal).
Meanwhile, gains in imports of computer equipment (up 13 per cent), medium and heavy vehicles (up 9 per cent), and industrial machinery and equipment (up 3 per cent) suggested a solid pick-up in business investment.
The U.S. has run annual trade deficits since the 1970s, importing more goods than it exports and posting a more modest trade surplus in services. Canada sent 73.4 percent of all goods exports to the United States in March.
Canadian imports climbed six per cent to $51.7 billion in March due to the motor vehicles and parts sector as well as consumer goods. Exports excluding energy products rose 3.6 percent.
And, wheat exports rebounded in the month, up 52 percent, following a sharp decline in February, which coincided with rail transportation disruptions in Western Canada. Crude oil imports dropped by US$0.5 billion in March.