Canadian International Trade

In April 2020, Canadian exports and imports fell respectively by 29.7 % and 25.1 %, compared to the previous month. Compared to the same period last year (i.e., April 2019), they declined respectively by 35.2 % and 30.6 %. These historic declines have more to do with the confinement than with the border closures during the COVID-19 pandemic. Border closures apply to the movement of people, but not to freight shipping. The confinement or the nationwide lockdown has affected the production and the sales of goods that were not deemed essential by the provincial governments. As a result, their supply and demand fell, which impacted on international trade.

Figure: Exports and Imports, Canada, 1997:M1-2020:M4

As it appears in the above figure, the trade balance of Canada (i.e., the difference between its exports and its imports) has become negative since December 2008. Even though, in April 2020, the decline in the exports or in the imports was unprecedented, the trade deficit occasioned was not. In April 2020, the trade deficit was 3 251 million versus 4 953 in December 2018.

There will not be any important fall in the Canadian gross domestic product (GDP) because of the decline in both exports and imports. There are two reasons for that. First, both exports and imports fell. Second, it is rather the balance of trade that contributes to the GDP.

The United States (US) are Canada's main trading partner (see the table below). In April 2019, 73.6 % of Canadian exports went to the US. In April this year, this share dropped to 68.4 %, as exports to the US decreased by 40.6 %. On the other hand, between these two periods, the share of China rose from 4.2 % to 6.3 % and the share of Japan rose from 2.2 % to 3.7 %. The increase in the share of China is mostly due to the decline in the exports to the US. Exports to China rose by 15.2 % between March and April, but they fell by 4.5 % compared to April 2019. On the other hand. exports to Japan rose by 8.1 % year-over-year and by 26.3 % between March and April.

Table: Canada's Main trading Partners by Shares of Exports and Imports, 1997:M1-2020:M4.

Country	Exports	Imports
United States	77.8 %	67.5 %
European Union	7.3 %	9.8 %
China	2.8 %	4.9 %
Mexico	1.4 %	2.6 %
Japan	2.4 %	2.6 %

Imports from the US, Mexico, and Japan also fell. Between April 2019 and April 2020, while the share of the US in Canadian imports was falling from 63.7 % to 56.1 %, the share of China rose from 7.4 % to 11.3 %. The imports from such other trading partners as Brazil, Peru. and Switzerland also rose. In April 2020, imports from these three countries respectively rose by 52.3 %, 36.9 %, and 24.1 %.