Highlights of Canada’s Merchandise Trade Performance in 2019

Office of the Chief Economist, Global Affairs Canada
Kevin Jiang

February 2020

Table of contents

Overview

World

Total Canadian merchandise tradeFootnote 1 reached a record high of nearly $1.2 trillion in 2019. However, after registering two consecutive years of rapid growth, Canada’s merchandise exports and imports both decelerated in 2019. For the full year, Canadian merchandise exports climbed 1.4% to reach $592.6 billion, compared to the 5.7% and 7.0% growth in 2017 and 2018. Similarly, growth in merchandise imports moderated from 5.4% in 2017 and 6.0% in 2018 to 0.9% in 2019. However, because of the faster growth in exports, Canada’s merchandise trade deficit with the world narrowed by $2.9 billion to $8.8 billion, the smallest merchandise trade deficit since 2014.

Figure 1: Annual Change in Canadian Merchandise Trade, 2015 – 2019
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Trade Direction20152016201720182019
Exports-0.5%-1.4%5.7%7.0%1.4%
Imports4.7%-0.5%5.4%6.0%0.9%

By Product Sector

At the sector level, Canada’s top five export sectors all improved compared to 2018. However, in contrast to the two previous years, Canadian exports were driven by a non-energy sector – precious stones and metals. Supported by the second largest annual growth in gold exports on record, precious stones and metals grew by $4.6 billion or 19.2% in 2019, accounting for over half of Canada’s overall export growth.

Energy, Canada’s largest export sector, grew by a moderate 1.1% in 2019, primarily due to increased crude oil exports (+3.7%). This was the third consecutive year of expansion in this sector, largely reflecting increasing export volumes and rebounding crude oil prices. Excluding energy products, Canadian merchandise exports rose 1.5% in 2019. The other three top export sectors, automotive, machinery, and electronics grew by 4.1%, 3.3%, and 3.5%, respectively. Exports of automotive advanced due to armored vehicles, trucks and passenger vehicles, machinery exports grew due to centrifuges, machinery parts, and computers, and exports of electronics were up mainly from electronic integrated circuits. Other expanding export sectors include mineral ores (+$1.5 billion) and aircraft and parts (+$1.2 billion).

Figure 2: Price Per Barrel of WCS* Oil in USD, 2015-2019
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YearQuarter$US/bbl
2015Qtr133.9
2015Qtr246.4
2015Qtr333.2
2015Qtr427.7
2016Qtr119.2
2016Qtr232.3
2016Qtr331.4
2016Qtr435.0
2017Qtr137.3
2017Qtr237.2
2017Qtr338.3
2017Qtr443.1
2018Qtr138.6
2018Qtr248.6
2018Qtr347.3
2018Qtr419.4
2019Qtr142.6
2019Qtr249.1
2019Qtr344.2
2019Qtr441.1

Table 1: Canadian Merchandise Exports by Sector

Sectors2019 $M∆19/18 %∆19/15 %
Energy130,6131.131.7
Automotive81,5234.15.8
Machinery46,1423.316.0
Precious stones and metals28,25619.215.5
Electronics17,9413.56.3
All other sectors288,078-1.18.0
Total592,5531.413.1

On the import side, three out of the top five sectors posted growth. A large increase in the import of trucks resulted in Canada’s automotive imports growing 1.1% in 2019, to reach $98.8 billion in value. Imports of machinery rose 2.8% due to turbojets and other gas turbines while import of electronics improved marginally. Conversely, imports of energy products decreased 7.3% mostly from lower imports of refined oils and plastics fell 1.4%.

Table 2: Canadian Merchandise Imports by Sector

Sectors2019 $M∆19/18 %∆19/15 %
Automotive98,7721.115.7
Machinery91,8412.813.2
Electronics58,6030.711.0
Energy44,094-7.316.5
Plastics21,708-1.413.8
All other sectors286,2851.810.1
Total601,3040.912.2

By Trading Partner

Globally, the growth in Canadian merchandise exports was supported by the United States (crude oil), the United Kingdom (gold), Germany (precious metal scraps), Saudi Arabia (armored vehicles), and Bangladesh (soybeans and leguminous vegetables), while merchandise imports rose primarily due to Peru (gold), Vietnam (phones), and France (aircraft).

However, these gains were tempered by lower exports to China (rape seeds and soybeans), Mexico (rape seeds, aircraft, wheat), Belgium (diamonds), and Spain (crude oil and aircraft), as well as lower imports from Azerbaijan (crude oil), Argentina (gold), and Norway (ships and crude oil).

United States

Canada’s merchandise exports to the United States grew faster than its global exports, up 2.1% or $9.0 billion in 2019 to reach $447.0 billion in value. In contrast, Canadian exports to non-U.S. markets declined 0.5% or $0.8 billion to $145.6 billion. Consequently, Canada reversed its trend of trade diversification away from the U.S. in 2019, with the U.S. share of Canadian merchandise exports growing by 0.5 percentage points to 75.4%.

Figure 3: U.S. Share of Canadian Merchandise Exports
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Year201420152016201720182019
U.S. Share76.8%76.7%76.3%75.8%74.9%75.4%

At the same time, Canadian merchandise imports from the United States moved sideways, up 0.1% or $239.5 million in 2019 to $304.8 billion in value, primarily due to higher imports of automotive products and machinery being offset by lower imports of iron and steel, energy products, plastics, and aluminum. As exports to the U.S. outperformed imports, Canada’s merchandise trade surplus with the United States climbed $8.8 billion to $142.1 billion in 2019, the largest since 2008.

The growth in exports to the U.S. was driven by energy products, which rose 3.3% or $3.8 billion, on the back of higher volumes of crude oil exports. Excluding energy products, Canadian merchandise exports to the United States advanced 1.6% in 2019, led by exports of vehicles and parts (mainly trucks and passenger vehicles), which rose 2.8% or $2.0 billion in 2019. Other product sectors such as aircraft and parts (+30.6%) and precious stones and metals (+16.2%, mainly gold) also made significant contributions. On the other hand, tensions surrounding wood, aluminum, and iron and steel products dragged down total growth.

According to data from the United States Census Bureau, the U.S. posted a surge in merchandise imports from Mexico in 2019, up US$12.0 billion or 3.5% (mainly automotive products). As a result, Mexico surpassed China and Canada to become the largest merchandise trading partner for the United States, totaling US$614.5 billion in value, followed closely by Canada (US$612.1 billion) in second place. The U.S.-China trade war lowered both exports to (-11.3%) and imports from (-16.2%) China, resulting in China falling to the third place in 2019 (US$558.9 billion), down from first place the year prior.

Canada-European Union Comprehensive Economic and Trade Agreement (CETA)

Building upon the momentum from the first year of CETA, Canadian exports to the European UnionFootnote 2 climbed 7.3% or $3.3 billion in 2019 and merchandise imports rose 4.8%. However, the growth in Canadian exports can be almost entirely attributed to the recovery in gold exports. Excluding goldFootnote 3, Canadian exports to the EU fell 0.7% during this period, with lower exports of energy products (-23.9%) contributing the most to the decline.

Canada’s trade performance with the UK has been dictated by fluctuation in gold tradeFootnote 4 and 2019 was no exception. Following a 15.4% decline in 2018, Canadian gold exports to the UK rose by nearly one-third in 2019 or $3.5 billion in value as both prices and quantities recorded double-digit growth rates. As a result, Canadian merchandise exports to the United Kingdom climbed $3.2 billion or 19.3% in 2019 to $19.8 billion. This represents the largest annual growth for Canadian exports outside the U.S.

Exports to Germany posted the second largest increase in the EU and the third largest increase overall (behind the US and the UK), up $1.5 billion or 30.1% in 2019. Growth was driven by precious stones and metals (+121.5%, mainly metal scraps and coin), aircraft and parts (+99.8%), and mineral ores (+50.5%). On the other hand, exports to Belgium registered the largest decrease in the EU, falling $0.7 billion or 17.7% (mainly diamonds) and exports to Spain fell 30.0% due to energy products and aircraft and parts. Overall, growth in exports was recorded in 14 EU countries and declines were recorded in the other 14.

Table 3: Canadian Merchandise Exports to the EU

Country2018 $M2019 $M∆19/18 %∆19/18 $M
United Kingdom16,60619,80819.33,202
Germany4,8366,29330.11,457
Netherlands4,7515,1849.1433
France3,4423,6365.6194
Italy3,1103,2414.2131
Belgium3,7893,118-17.7-671
Spain2,1471,504-30.0-643
Ireland7988435.745
Poland745744-0.1-1
Finland858700-18.4-158
Other EU3,8413,126-18.6-715
Total EU44,92348,1967.33,273

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

For the first 12 months CPTPP was in force, Canadian merchandise exports to CPTPP members which have ratified the agreementFootnote 5 declined marginally, down 0.2% in 2019 to reach $17.8 billion, and merchandise imports rose 5.6% to $27.8 billion. Lower exports of wood, aluminum, and oil seeds were mitigated by higher exports of cereals, meat, and machinery. The decline in aluminum and oil seeds can be mainly traced back to Japan, where total exports declined 3.4% in 2019 to $12.5 billion. In contrast, total exports to Singapore and Australia grew 26.8% and 10.1%, respectively. Exports to Singapore were supported by the 28.3% increase in machinery exports and the 95.0% growth in exports of electronics, while exports to Australia grew main due to cereals (+$191.2 million), machinery (+12.2%), electronics (+23.4%), and motor vehicles and parts (+23.3%).

Table 4: Canadian Merchandise Exports to Ratified CPTPP Countries

Country2018 $M2019 $M∆19/18 %∆19/18 $M
Japan12,95912,523-3.4-436
Australia2,0512,25810.1206
Singapore1,2021,52426.8322
Vietnam1,081993-8.1-87
New Zealand535497-6.9-37
CPTPP Ratified17,82717,795-0.2-32

Fast-Growing Top 30 Export Markets

Out of Canada’s other top export markets, Bangladesh, Saudi Arabia, and Turkey recorded the fastest growth and reached new record highs. After three consecutive years of declines, Canadian exports to Bangladesh exploded in 2019, up 91.7% to $1.2 billion. The growth was mainly supported by higher exports of agriculture products - oil seeds (+583.9%), vegetables (+156.2%), and cereals (+52.9%). Because of this spike in exports, Bangladesh improved to become the 25th largest merchandise exports destination for Canada in 2019, up from 37th in 2018. Exports to Saudi Arabia grew for the fourth consecutive year, rising 49.6% to $2.8 billion. Like in the previous years, this growth was supported by exports of armored vehicles. Exports to Turkey improved for the seventh consecutive year, up by 21.7% in 2019 to $1.6 billion, led by aircraft and parts (+309.8%) and cereals (+299.4%).

Top 10 Growth Markets for Canadian Merchandise Exports, 2019 (by change in value)

Top 10 Growth Markets for Canadian Merchandise Exports, 2019 (by change in value)
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RankMarket∆19/18 $M
1United States9,002
2United Kingdom3,202
3Germany1,457
4Saudi Arabia934
5Bangladesh597
6India483
7Netherlands433
8Egypt347
9Singapore322
10Turkey288

Declining Merchandise Exports: Mainland China and Mexico

For the full year, declines in Canadian merchandise exports were concentrated in a select few countries. Mainland China, Canada’s second largest export destination, recorded the largest fall in exports by far, down $4.4 billion or 16.0% in 2019 to $23.2 billion in value. This was the first export contraction since 2014, and the fastest one-year fall since 1997.

The fall in exports was primarily due to the Chinese ban on the importation of canola and soybeans from Canada, which led to a 77.6% or $3.7 billion reduction in oil seeds exports compared to the previous year. Furthermore, Canada’s exports of wood pulp and precious stones and metals (mainly gold) fell by 14.6% and 58.2%, respectively. These declines were partially mitigated by higher exports of mineral ores (+41.8%, iron and copper) and vehicles and parts (+16.2%). Meat products were another source of contention as meat exports to China had a solid start in the first half of 2019 but fell sharply from July to November before rebounding in December. For the full year, meat exports to China rose by 17.6%.

Text version
Year Exports ($ Billions)
2000 3.7
2001 4.3
2002 4.1
2003 4.8
2004 6.8
2005 7.2
2006 7.8
2007 9.5
2008 10.5
2009 11.2
2010 13.2
2011 16.8
2012 19.4
2013 20.5
2014 19.3
2015 20.2
2016 21.0
2017 23.6
2018 27.7
2019 23.2
MonthYear-over-year % change
January17.5%
February2.7%
March-3.5%
April-7.2%
May-5.2%
June-4.7%
July-23.6%
August-7.4%
September-26.1%
October-40.6%
November-36.8%
December-25.7%

Canadian merchandise exports to Mexico registered the second largest contraction in 2019, falling by 10.9% or $0.9 billion to $7.3 billion in 2019. This fall represents the first decline in Canadian exports to Mexico since 2012, and was primarily caused by the double-digit declines in oil seeds (-25.3%), aircraft and parts (-40.3%), cereals (-32.4%), and iron and steel (-24.3%).

Year-over-year Change in Canadian Merchandise Exports, 2019

Map 2: Year-over-year Change in Canadian Merchandise  Exports, 2019
Text version
Market∆19/18 %∆19/18 $M
United States2.1%9,002
United Kingdom19.3%3,202
Germany30.1%1,457
Saudi Arabia49.6%934
Bangladesh91.7%597
Spain-30.0%-643
Belgium-17.7%-671
Mexico-10.9%-898
China-16.0%-4,440

Over the Last Three Years

From 2017 to 2019, Canada’s global merchandise exports averaged $574.3 billion and registered an average annual growth of 4.2%. The growth in exports was supported by the United States (+3.9% annually), Germany (+23.3% annually), United Kingdom (+5.8% annually), the Netherlands (+28.4% annually), and Hong Kong (+34.1% annually). However, these gains were partially offset by lower exports to Switzerland (-16.8% annually), Mexico (-3.5% annually), and Belgium (-5.9% annually).

Table 5: Canada’s Top 30 Export Markets

RankMarket2019 ($M)∆19/18 (%)∆19/15 (%)
1United States446,9502.111.1
2China23,249-16.015.2
3United Kingdom19,80819.324.2
4Japan12,523-3.428.1
5Mexico7,319-10.910.2
6Germany6,29330.174.2
7Korea South5,485-6.536.5
8Netherlands5,1849.145.7
9India4,78211.210.5
10Hong Kong, SAR4,0233.02.8
11France3,6365.616.3
12Italy3,2414.242.1
13Belgium3,118-17.7-0.2
14Saudi Arabia2,81949.6136.5
15Australia2,25810.119.1
16Brazil2,2542.90.2
17Norway2,163-9.715.8
18Taiwan2,0412.240.0
19Indonesia1,930-10.16.3
20Turkey1,61821.743.6
21Singapore1,52426.81.1
22Spain1,504-30.033.5
23United Arab Emirates1,4982.1-26.0
24Switzerland1,434-23.220.6
25Bangladesh1,24891.738.1
26Vietnam993-8.151.3
27Colombia936-7.019.5
28Thailand89514.70.6
29Chile871-11.510.2
30Ireland8435.740.2
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