Official data highlights shifting trade patterns as Ottawa accelerates India deal talks
Canada’s evolving trade picture is strengthening the case for a renewed economic partnership with India, as new federal data shows exporters increasingly expanding beyond traditional markets, even as overall trade deficits deepen.
Fresh figures released Thursday by Statistics Canada reveal a rebound in exports late last year alongside record shipments to non-US destinations, highlighting Ottawa’s push to diversify trade relationships ahead of prime minister Mark Carney’s planned visit to India.
India’s top envoy in Ottawa has suggested momentum is building toward a long-awaited agreement, telling the Canadian Press that Canada and India could sign a trade deal within a year: “We expect it to be much faster, given that we both have had enough experience of doing these kind of free trade agreements in the last one or two years,” said High Commissioner Dinesh Patnaik.
The shifting trade landscape provides context for renewed Canada-India negotiations following a prolonged diplomatic freeze.
Carney is expected to travel to New Delhi in early March to advance discussions around a comprehensive economic partnership agreement, part of a broader strategy to diversify trade amid geopolitical uncertainty and tariff risks.
A successful agreement could open opportunities across services, agriculture, technology, energy and investment — sectors increasingly central to Canada’s growth strategy.
Diversification gaining momentum
Statistics Canada reported merchandise exports rose 2.6% in December to $65.6 billion, outpacing a 0.6% increase in imports and narrowing the monthly goods trade deficit to $1.3 billion.
While the improvement offered short-term relief, the broader trend highlights growing urgency for new markets. Canada’s annual merchandise trade deficit ballooned to $31.3 billion in 2025 — the largest since 2020 — marking a third straight yearly shortfall.
Exports to countries other than the United States reached an all-time high in December, rising 5.8% during the month, driven largely by stronger shipments of precious metals including unwrought gold.
That shift matters for policymakers seeking to reduce dependence on the US, which still dominates Canadian trade flows despite declining share.
According to Statistics Canada, exports to the United States accounted for 71.7% of total shipments in 2025, down from 75.9% the year before. Imports from the US also slipped as a proportion of total purchases, falling to 58.8%.
At the same time, trade activity with other countries accelerated sharply. Merchandise trade with non-US partners climbed to $553 billion in 2025, up 14.3% from the previous year.
Canada’s exports excluding precious metals actually declined overall last year, suggesting commodity prices — particularly gold — masked underlying softness across several sectors, including energy products, which posted the steepest annual drop due to lower prices.
Services trade adds stability
Services trade offered a brighter picture. Statistics Canada reported service exports rose 0.8% in December to $20.2 billion, while imports fell 2.2%, widening the monthly services surplus to $0.7 billion.
On an annual basis, Canada’s services surplus expanded to $4.4 billion in 2025 as exports climbed 3.2%.
Growth in commercial services — particularly non-financial business services — drove much of the increase, highlighting sectors where Canadian firms may benefit most from expanded international agreements.
