Canadian steel exports headed south of the border fell dramatically in June – the first month the United States’ 25% tariff on Canadian steel took effect.
The latest data from Statistics Canada shows the amount of U.S.-bound steel fell nearly 37% over May. Aluminum exports, subject to a 10% tariff, fell by 7%.
“The tariffs appear to be reducing Canadian exports to the U.S., and will likely serve to raise the cost of imported steel and aluminum for U.S. manufacturers with little relief in sight,” wrote TD Bank senior economist Fotios Raptis in a note to investors.
Both drops were preceded by a significant ramp up in export activity between February and May, and overall, Canada’s exports to its largest trading partner increased 2.5% on a month-to-month basis to top $37 billion.
The gain is one positive element in what Bank of Montreal macroeconomic strategist Benjamin Reitzes calls a “solid report.”
Total Canadian exports rose 4.1% to crack $50 billion for the first time in June, and Canada’s trade deficit with the world narrowed to $626 million from $2.7 billion – its smallest deficit since January 2017.
Helping the gain was heightened demand for aircraft and transportation equipment, up 19% to a record $2.5 billion. Exports of energy products rose 7% to reach $9.9 billion, their highest level since October 2014.
Statistics Canada also noted that Canadian exports to countries other than the U.S. rose sharply in June to hit a record $13.6 billion. Higher aircraft and metal exports to countries including Germany, India, Belgium and Mexico contributed most to the increase.
From May to June, more Canadian exports headed to France (+46%), Germany (+41%) and Mexico (+15.5%).
Year over year, the largest percentage increases for non-U.S. exports were registered by the Netherlands (+47%), Germany (+53%), Italy (+25%) and Mexico (+22%).
