“On June1, 2018, the United States implemented additional tariffs on selected Canadian steel and aluminum products exported to the United States. The additional tariffs are 25% and 10% respectively…. In 2017, the export value of steel products that are subject to the 10% rate was $9.2 billion, and the export value of steel products that are subject to the 25% rate was $7.2 billion. In response, on July 1, 2018, Canada imposed tariffs on the imports of certain products from the United States. These tariffs are also at the 25% and 10% levels. (Statistics Canada Daily, July 6, 2018)

Canada’s merchandise trade picture worsened between April and May, as the trade deficit increased from $1.9 billion in April to $2.8 billion in May. In nominal terms, imports increased 1.7% in May, while exports remained flat compared to the previous month.

There were several temporary factors that worsened Canada’s trade figures in May, including the fact that energy imports swelled to compensate for the temporary shutdown of Canadian refineries. And as well, imports in the aircraft category increased sharply due to the delivery of several airliners from the U.S.

However, somewhat more worrisome is the observation that Canadian exports of autos and light trucks to the rest of the world (primarily to the U.S) which amounted to $24.9 billion over the first five months of 2018 were nearly 15% below exports in the same period in 2017.

Of course, the slippage of Canadian auto exports to the rest of the world is at risk because of Donald Trump’s threat to impose tariffs on Canadian auto imports into the U.S.