Canada's Trade Surplus Narrows in July as Export Gains Give Way to Tariff Headwinds, TD Says

09:54 AM EDT, 09/03/2026 (MT Newswires) -- Canada's trade surplus narrowed sharply to C$769 million in July from C$4.2 billion in June, as exports fell 2.3% on the month, ending a five-month streak of consecutive gains, said TD Economics in a Thursday note. The July decline in exports, alongside a rebound in imports, partially reversed the strong trade gains recorded in the second quarter, according to TD. August data could receive a temporary lift from tariff-related front-running ahead of the new US Section 338 tariffs that took effect on Aug. 22, added the bank. However, any increase would likely reflect activity being brought forward rather than stronger underlying demand. "Trade contributions are therefore likely to remain choppy in the quarters ahead as higher tariffs continue to disrupt cross-border flows," wrote TD Economist Marc Ercolao in the note. The 50% US Section 338 tariffs and Canada's counter-tariffs further escalate trade tensions, keeping pressure on affected industries and risking weaker business confidence, investment and hiring, added Ercolao.