Canada's efforts to diversify its trade beyond the U.S. are yielding tangible results, said Bank of Montreal Capital Markets (BMO) on Wednesday, a day after the country released its latest merchandise trade surplus.
Exports to the U.S. have risen in recent months, lifted by an earlier upswing in oil prices, but remain only modestly above 2024 levels year to date, wrote BMO Chief Economist Douglas Porter in a note.
While exports to non-U.S. markets have eased slightly in recent months, they remain around 50% above 2024 levels and have outperformed U.S.-bound exports for the past 18 months, stated the bank's economist.
Higher commodity prices account for some of the gains, but the unusually strong performance of non-U.S. exports suggests Canada's trade diversification is advancing, according to BMO.
As a result, the U.S. share of Canada's exports has fallen to about 68% so far this year, down from 76% in 2024 and representing its lowest level in at least three decades, added the bank.