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Has the Canadian trade balance permanently shifted?

The U.S. trade balance, especially for goods, receives a lot of attention. Of course, FRED has data from all over the world, so we can stroll north a bit and look at the Canadian trade balance of goods.

Note the deep plunge in 2008, which Canada still hasn’t recovered from. First, it’s unusual to see a shock in the data this drastic and persistent, especially without a revolution or economic collapse of some kind. Second, for Canada, the Great Recession has looked much more like a normal recession than it has elsewhere in the world. So why the big chill in Canadian trade? Canada’s trade balance has always hinged on primary commodities. This country is a major exporter of all sorts of minerals and agricultural products—especially oil. These commodities are traded on world markets and are sometimes subject to wild price swings. And commodity prices did indeed run high until 2008, when they crashed. While they’ve recovered somewhat since then, the particular composition of Canadian imports and exports has kept the trade balance mostly negative. Is it going to stay that way? Check back in a few years, eh?

How this graph was created: Search for “Canada trade balance” and click “Add to Graph.”

Suggested by Christian Zimmermann.

View on FRED, series used in this post: BPBLTD01CAQ637S

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