Canada Records $21.2B Current Account Deficit Amid US Trade Dispute

Canada's current account deficit reached a record $21.2 billion in the second quarter of 2025, driven by a significant drop in exports amid an ongoing trade dispute with the United States. Goods exports fell by 13.1 percent, with shipments to the U.S., Canada's largest trading partner, declining sharply and causing the goods trade deficit to hit a record $19.6 billion. The trade surplus with the U.S. shrank dramatically from $31.3 billion to $10.1 billion, highlighting the impact of U.S. tariffs and a stronger Canadian dollar on Canada's export performance. Experts warn that the trade tensions, coupled with Canada's slow diversification of trade partners, could pressure the country's economy and labor market, potentially leading to manufacturing job losses and higher unemployment. Prime Minister Mark Carney's efforts to promote Canadian exports to Europe signal a strategic push to reduce dependence on U.S. trade. Economists suggest that if trade conditions do not improve, the Canadian dollar and economy may face significant challenges in the near term.