Market News

Promit Mukherjee

OTTAWA (Reuters) -Canada's trade surplus in January exceeded expectations by a wide margin posting a 32-month record as fears of tariffs from the U.S. pushed exports of cars and energy products higher, especially south of its border, data showed on Thursday.

The trade surplus rose to C$3.97 billion ($2.78 billion), more than double the upwardly revised C$1.69 billion seen in December, Statistics Canada said, including a record surplus with top trading partner the United States.

U.S. President Donald Trump slapped a 25% tariff on almost all Canadian imports and after retaliation by Prime Minister Justin Trudeau, he has threatened to stack up more tariffs on them.

On Thursday, Trump agreed to suspend the tariffs for a month provided the products imported into the U.S. comply with the terms of the Canada-U.S.- Mexico free trade agreement.

Canada also rolled back a plan to slap a second round of retaliatory tariffs on the U.S. Its 25% tariff on C$30 billion of goods imported from the U.S. are still in place.

Analysts polled by Reuters had forecast Canada's trade surplus to be at C$1.28 billion and have said that trade balances would benefit from companies front-loading orders in January.

"This uncertainty is creating major swings in the data, and we are just getting started," Andrew DiCapua, Principal Economist, Canadian Chamber of Commerce.

Total exports increased 5.5% in January to a record of C$74.5 billion, following a 6% increase in December. A 1% decline in the value of the Canadian dollar to its U.S. counterpart in January also led to an increase in export value, it said.