Expectations were for the trade deficit to narrow to C$3.40 billion, according to economists at Royal Bank of Canada.
The Commerce Department said Wednesday that the trade deficit dropped to $46.2 billion in April, down from $47.2 billion in March and lowest since September. As a result, the trade surplus with the United States grew to C$3.63 billion in April from C$2.03 billion in March.
The U.S. trade deficit fell to a seven-month low in April as exports rose to a record high, lifted by an increase in shipments of industrial materials and soybeans. Exports of goods and services rose 0.3% to Dollars 211.2 billion, the highest on record.
Year-to-date, the goods and services deficit increased $20.8 billion, or 11.5%, from the same period in 2017.
Canadians' auto buying binge seems to be waning, with imports of motor vehicles down 5.8 percent in April.
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On June 1, the US imposed tariffs on some Canadian steel and aluminum products of 25 per cent and 10 per cent, respectively.
Natural gas prices grinded higher ahead of Thursday's inventory report from the Department of Energy. The U.S. trade deficit with China fell sharply because of a drop in imports, but the decline is probably unrelated to pending tariffs on Chinese goods.
China's trade performance has got off to a strong start this year, supported by sustained demand at home and overseas. Shipments of metals and non-metallic minerals rose 9.1 percent, more than reversing the 7.8 percent slump seen in February, aided by solid sales of intermediate metals including unwrought gold. Deficit narrowed by almost half CAD 1.9 billion. Exports rose 1.6% in April while imports fell 2.5%.
The price of oil, one of Canada's major exports, fell even after Venezuela raised the prospect of a halt to some crude exports. A similar story emerged for consumer goods imports with the pull-back appearing to be related to past strength. Weak productivity suggests the economy could struggle to maintain the current strong pace of growth.
Meanwhile, exports of some other commodities saw a decline in March such as crude oil, which decreased by 28 percent, potatoes (3.7 percent), pastries and various food preparations (1.2 percent) and fertilizers (48.1 percent).