(MARCH 6): Canada’s exports to the US reached a fresh record on shipments of cars, auto parts and oil, helping the northern nation post its highest-ever trade surplus with the US.

The country’s merchandise trade surplus with the US widened to C$14.4 billion (RM44.36 billion) in January, from C$12.3 billion in December, Statistics Canada said on Thursday. Exports to the US surged 7.5% in January and set a record for a second consecutive month. 

The data show how the uncertainty around US President Donald Trump’s tariffs have influenced trading flows and business decisions, with exporters and importers trying to avoid higher costs due to steep levies. Sweeping tariffs on Canada and Mexico were initially expected to start as soon as inauguration day on Jan 20, before Trump announced a Feb 1 start date.

After a one-month delay, the Trump administration on Tuesday imposed 10% tariffs on Canadian energy products and 25% duties on everything else the US buys from Canada and Mexico, with automakers getting a reprieve until April. Additional levies targeting what Trump views as trade imbalances are also expected next month.

The Canadian government this week immediately hit back with retaliating levies on C$30 billion worth of American products, including appliances, cosmetics, fruit and tires. The list will be broadened in three weeks and cover American-made vehicles and other products, totalling C$155 billion in import value.

The overall US trade deficit widened to a record US$131.4 billion (RM582.45 billion) in January, according to Commerce Department data that was released at the same time as the Canadian figures.

Overall in January, Canadian exports exceeded imports by C$4 billion and as a result, its trade surplus with the world widened from an upwardly revised C$1.7 billion in December. Economists in a Bloomberg survey were expecting a much smaller C$1.3 billion surplus.

Exports jumped 5.5% in the first month of the year and imports rose 2.3%, both reaching record highs with a fourth straight monthly increase. Shipments to the US underpinned the surges in key export products including motor vehicles and parts, energy products and consumer goods.

Canada’s economy depends heavily on its ability to trade with the US. In 2024, the combined value of Canada’s imports and exports of goods traded with the US surpassed the C$1 trillion mark for a third straight year. The US was the destination of 75.9% of Canada’s total exports and was the source of 62.2% of Canada’s total imports.

Shipments to countries other than the US fell 1% in January.

Auto exports, with more than 90% of passenger cars and light trucks destined for the US, rose the most in January, soaring 12.5%. Energy exports grew 4.8%, driven by crude oil and natural gas bound for the US, while exports of consumer goods rose 7.8%, mainly because higher shipments of pharmaceutical products to the south. Exports of industrial machinery also grew, again primarily due to increases in US demand.

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