U.S.-Canada trade improvement in June remains modest: economic experts suggest
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Canada's trade relationship with the U.S. has been under strain in recent months, as tariffs imposed by the U.S. have caused a significant shift in trade patterns and a widening trade deficit for Canada.
In June 2025, the U.S. placed a 35% tariff on Canadian goods, excluding those under the Canada-United States-Mexico agreement (CUSMA). This move followed a series of tariffs imposed in Q2 2024, which had a profound impact on Canada's trade with its largest trading partner.
According to BMO senior economist Shelly Kaushik, while June 2025 saw an increase in exports to the U.S., it doesn't necessarily indicate a substantial change. She suggests that the April and May months were "depressed" in reaction to the tariffs.
RBC Economics assistant chief economist Nathan Janzen reported that most Canadian exports to the U.S. crossed the border duty-free in June, with 92% being exempt from duties for products compliant with the USMCA (CUSMA) trade agreement. However, the newly-imposed 35% tariff will apply to a "relatively small share" of non-CUSMA compliant exports.
Despite these exemptions, Canada's trade deficit with the world widened to $5.9 billion in June, up from $5.5 billion in May. The increase in imports was mainly due to the import of a module for an offshore oil project. Imports from the U.S. also increased by 2.6% in June 2025, marking the first increase after three consecutive monthly decreases.
On the other hand, exports to the U.S. in June 2025 were still 12.5% lower compared to June 2024. Exports from Canada to the U.S. increased by 3.1% in June 2025, following four consecutive months of decreases. However, exports to countries other than the U.S. dropped 4.1% in June, after reaching a record high in May.
The average effective tariff rate on imports from Canada remains one of the lowest on trading partners at 2.4%. Nevertheless, Canada continues to face a range of tariffs from the U.S., including a 50% tariff on steel and aluminum imports, 25% duties on the automobile industry, and certain copper products.
If larger tariffs are imposed on the U.S. import market, it could negatively impact Canada due to the close integration of Canada's industrial sector with that of the U.S. Negotiations remain ongoing, and public sentiment in Canada grows increasingly cautious regarding the resolution of these trade issues.
[1] Source: Statistics Canada [2] Source: RBC Economics [3] Source: BMO Capital Markets [4] Source: U.S. Customs and Border Protection [5] Source: Government of Canada
- Despite the ongoing trade tensions, Canadians found solace in the summer weather, with the baseball season in full swing and outdoor summer sports events providing a much-needed break from the economic strains.
- As the evening cooled down, the economy remained a hot topic of conversation, with many Canadians expressing concerns about the widening trade deficit and the potential impact of larger tariffs on their sports equipment imports from the U.S.
