-- The surge in oil prices and another jump in gold exports were the main factors pushing Canada's trade balance back into surplus in March, said RBC after Tuesday's data.
Beyond those products, the data was mixed but broadly consistent with an external demand backdrop still under pressure from United States tariffs, but also still showing signs of stabilization, noted the bank.
Excluding price impacts, exports still declined by an annualized 2.4% in Q1 as a whole -- exports of (heavily tariffed) steel and lumber products were still running 50% and 22%, respectively, below year-ago levels. But motor vehicle exports continued to recover from production disruptions earlier in the year.
Overall export volumes -- excluding price impacts -- edged slightly above year-ago levels for the first time since March 2025.
A surge in Q1 imports leaves net trade tracking a large four percentage points from Q1 GDP growth, but also is consistent with offset from relatively resilient domestic demand, including a 17% annualized rate increase in industrial equipment and imports -- a positive sign for Canadian business investment, stated RBC.
Significant trade uncertainty remains with negotiations on CUSMA trade deal renewal likely to intensify in the coming months, but the bank continues to expect, as a base-case, that a more stable U.S. tariff backdrop in 2026 -- although still at significantly higher tariff rates for some products -- will leave trade as less of a headwind to growth than it was in 2025.
The conflict in the Middle East is raising costs for households both in Canada and internationally, but the surge in net energy exports from higher oil prices is also significantly increasing revenues flowing into oil-producing regions, added the bank.
RBC's base-case outlook for the economy expects that, coupled with the lagged impact of earlier Bank of Canada interest rate cuts and higher government spending plans, will support further improvement in per-person and per-worker economic conditions in the year ahead.