Canada‘s export diversification reached an all-time high in May 2025, with pressure from tariffs imposed by the United States.
In 2025, U.S. President Donald Trump imposed tariffs on Canadian products using the International Emergency Economic Powers Act and Section 232. However, many imports under the USMCA were exempted. In 2024, 38% of imports from Canada entered under this treaty.
As of March 2025, tariffs of 25% were applied to most Canadian goods and 10% to energy and potash. In August, an increase to 35% was announced, effective August 1, 2025. Tariffs of 25% were also imposed on steel, aluminum and automobiles, with exceptions for USMCA-compliant products.
Canada’s export diversification
Under pressure from the new U.S. tariffs, Canadian exports to the U.S. fell 0.9% in May. They totaled 41.5 billion Canadian dollars, according to Statistics Canada. It was the fourth consecutive monthly drop.
The share of the United States as a destination for Canadian exports also fell. It went from a monthly average of 75.9% in 2024 to 68.3% in May. This is one of the lowest levels on record.
In parallel, Canadian imports from the United States decreased 1.2%. This was the third consecutive decline. Even so, Canada’s trade surplus with the U.S. rose slightly. It went from 3.1 billion in April to 3.2 billion in May.
Below is the percentage share of the United States as a destination for Canada’s total product exports:
- 2018: 74.9.
- 2019: 75.3
- 2020: 73.3.
- 2021: 75.4.
- 2022: 76.9.
- 2023: 77.6.
- 2024: 76.4.
Third markets
On the other hand, Canadian exports to other countries grew 5.7% in May. They reached an all-time high. Shipments to the United Kingdom (gold), Singapore (crude oil) and Italy (aluminum and pharmaceuticals) increased. However, exports to China fell, especially of canola and oil.
At the same time, imports from countries other than the United States fell by 2.0%. As a result, total trade with these countries reached 47.6 billion. This was the third consecutive monthly record. In addition, the trade deficit with these partners decreased from 10.7 billion in April to 9.1 billion in May.