Canadian Foreign Trade Is Reviving And Canada Posted A Trade Surplus Early This Year. Canada Hopes That The Biden Administration Will Decide To Rejoin The Trans-Pacific Partnership (TPP).

"Given Canada's historic over-dependence on trade, as well as its integration with the U.S. economy, it's difficult to think of anything that could have a greater impact on Canada's long-term recovery than the U.S. re-entering the Trans-Pacific Partnership (TPP)…This was a deal that President Trump walked away from in 2017, but the incoming Biden administration has hinted at its intent to re-enter the agreement, while also potentially ending the country's trade war with China. Both actions could lead to substantial economic benefits for countries like Canada, which have been harmed by association through these trade disputes in recent years." (RSM Canada, Jan. 2021)

Canada’s economy was significantly bolstered by international trade at the start of 2021. 

January’s $1.4 billion merchandise trade surplus was also the largest surplus since July 2014. Nonetheless, there were a series of special factors that boosted the monthly trade gains, and of course, they will likely not be repeated.

Canadian exports rose 8.1% in January to $51.2 billion, with increases occurring in all of the principal industrial groups. In real or volume terms Canadian exports increased by 5.1% in January, and exports were also 5.5% higher than year-earlier levels.

In nominal terms imports increased 0.9% in January to $49.8 billion, while in real or volume terms, imports rose 0.5%. In other words, over the last twelve months imports have been roughly flat in Canadian dollar terms.

An important part of the recent trade gain was because Canada’s trade surplus with the United States more than doubled in January to $6.2 billion, the largest Canadian surplus with the US since September 2008. Exports to the US rose 11.3% in January, while imports from the US edged up only 0.4% to $31.0 billion.

Realistically, a sizeable portion of Canada’s strong export surge in January was driven by a transitory spike in the volatile aircraft and other transportation equipment sectors as well as some unusually high transactions in retail gold bars.

Statistics Canada also noted that a Canadian airline had retired a number of aircrafts in its fleet, which were then exported to the United States.

Consumer goods exports rose 11.6% in January, though part of the increase reflected a surge in gold bar (sold at the retail level) exports to the United States.

Energy exports, which increased 5.9% in the month, continued to advance on higher prices and stronger volumes. Similarly, exports of forestry and building materials (which increased 10.7%) continued their winning streak on higher lumber demand and prices.

In closing, it is encouraging that Canada’s two-way trade is already above pre-pandemic levels.  Nonetheless, Canada’s trade reliance on the US is still crucial to its long-term economic prospects.

It is hoped that a trade boost with the US alongside an effective vaccine distribution will put Canada’s economy on track for two years of robust growth.

Still, Canada's longer-term economic prospects will largely depend upon a renewed expansion of global trade, and hopefully, that the Biden administration will rejoin the US into the Trans-Pacific Partnership (TPP).

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Canadian Exports Of Crude Oil And Bitumen

Canadian Exports Of Lumber Products