The ongoing trade challenges, particularly those posed by tariffs, are expected to continue affecting Canada's trade situation in the coming months, leaving the economic outlook uncertain.

Industry experts warn that tariffs are inflationary and detrimental to sales and production, complicating supply chains that require years and significant investment to relocate.

This decline is particularly striking as analysts had only anticipated a trade deficit of $1.5 billion for the month, underscoring the unexpected severity of the economic downturn.

The significant reduction in exports was largely driven by a 17.4% decline in motor vehicles and parts, with passenger cars and light trucks seeing a staggering 22.9% decrease.

Canadian-assembled vehicles now face a 25% tariff, which is reduced by the U.S. content, while Canadian parts can enter the U.S. tariff-free unless attached to Canadian-made vehicles.

Statistics Canada reported on June 5, 2025, that Canada's trade surplus with the U.S. shrank to $3.6 billion in April, marking the smallest surplus since December 2020.

April's trade data revealed a dramatic 15.7% drop in exports to the U.S., alongside a 10.8% decline in imports, representing the worst export drop since 2008, excluding the COVID-19 pandemic.

These tariffs, aimed at bringing manufacturing back to the U.S., have created chaos in the auto sector, complicating trade relations between the two countries.

Katherine Judge from CIBC Capital Markets described the current trade situation as a 'total collapse,' emphasizing Canada's over-reliance on the U.S. market.

Flavio Volpe from the Automotive Parts Manufacturers’ Association noted that the tariffs adversely affect both Canadian and U.S. companies, with American importers absorbing some of the costs.

Shelly Kaushik, a senior economist at BMO Capital Markets, indicated that the April figures reflect the ongoing trade war, particularly noting the impact of increased tariffs on steel and aluminum.

These developments may prompt a reassessment of traditional North American trade relationships, encouraging diversification in trade strategies to mitigate risks from economic instability.