Canada has a fascinating economy because so much of it depends on exports, mainly to the US, but it is also becoming a world player in various sectors.
Let's look at Canada's trade surplus and what it means for the economy and health of the country.
What Does it Mean to Have a Trade Surplus?
First, before we discuss the specifics about Canada's trade surplus, let's look at what it means to have a trade surplus in the first place.
A trade surplus is defined as "a situation in which a country sells more to other countries than it buys from other countries" or as "the amount of money by which a country's exports are greater than its imports." Canada exports more goods than it imports. That means Canada runs a trade surplus.1
Why Does Canada Have a Trade Surplus?
One of the main reasons that Canada has a trade surplus is because it exports so much oil and energy. However, Canada also has a number of important exports that are growing, especially since COVID-19 and amidst supply chain struggles in other countries.
Here is a breakdown of Canada's top exports as of April 2022:
- Oil: C$47.2 billion
- Motor vehicles: C$31.8 billion
- Gold: C$14.4 billion
- Motor vehicle parts: C$9.06 billion
- Wood: C$7.69 billion2
Canada exports most of these goods to the US, China, the UK, Japan, and Mexico.
Behind the Numbers of Canada's Trade Surplus
Want to know more about the economics behind Canada's trade surplus? Here are some facts and figures to help illustrate the current state of Canada's imports and exports:
- In most recent memory, Canada has always had a healthy trade surplus, and this remains the case. Interestingly, however, Canada's trade surplus has narrowed recently. According to Reuters, Canada's trade surplus with the world narrowed to C$2.49 billion in March from February.3
- One of the reasons for this narrowing was Canada's record-high imports, which some economists say show healthy consumer demand. There was also an increase in two-way auto trade, which might indicate that supply chain woes are easing a bit in the automotive industry.3
- Exports jumped 6.3% to C$63.63 billion.3
- Overall imports surged 7.7% to C$61.14 billion. Energy products and consumer goods led the surge.3
- Related to the country's trade surplus, Canada's GDP grew 0.8% in the first quarter of 2022, the country's third consecutive quarterly increase.4
- In 2020, Canada was the world's biggest exporter of wood, aluminum, fertilizer, rapeseed or colza seed, and legumes.2
- In 2020, Canada was the world's biggest importer of armored fighting vehicles/tanks, paints, iron and steel, tubes and pipes, cabbage and similar veggies, and wooden railway crossties.2
It's interesting to look at Canada's economy on a macroscale. These numbers help paint a picture of Canada's economic health.
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