By Erik Hertzberg and Mario Baker Ramirez
(Bloomberg) — Canada’s current account deficit reached the widest on record in the second quarter as the country’s exports to the US dropped because of the trade dispute.
The shortfall rose to $21.16 billion in the second quarter, Statistics Canada reported Thursday. That’s the largest since at least the early 1980s, and significantly deeper than the $1.32 billion deficit recorded in the first three months of this year, when Canadian exporters benefited from U.S. companies building inventories to get ahead of tariffs.
The current account deficit was only slightly wider than the $19.3 billion expected by economists in a Bloomberg survey, but captures the major trade disruption posed by U.S. President Donald Trump’s tariff barrage.
Canada’s goods exports have dropped to 2021 levels, the agency said, falling 13.1% in the second quarter. Canada’s trade deficit in goods widened to a record $19.6 billion, primarily due to a reduction in shipments to the U.S., the country’s largest trading partner.
The current account is a broad measure of international payments and receipts including trade in goods and services and other sources of income and investments. Large surpluses tend to support currencies, while deficits can act as a drag.
“Not a great showing for Canada, but it was clearly an exceptional quarter,” said Benjamin Reitzes, rates and macro strategist at Bank of Montreal. “Those flows need to turn positive or the Canadian dollar could be in for a rough ride.”
The Canadian dollar is up about 4.5% so far this year against the greenback, and was trading at $1.377 per U.S. dollar as of 10:03 a.m. Ottawa time.
In the U.S., inflation-adjusted gross domestic product increased at a 3.3% annualized pace, according to a revised estimate from the Bureau of Economic Analysis on Thursday.
Falling exports likely caused the country’s economy to stall in the second quarter. Economists surveyed by Bloomberg see gross domestic product contracting at an annualized minus 0.7% pace during that period. Statistics Canada reports GDP data by expenditure and income on Friday.
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Last modified: August 28, 2025