Canadian international trade in 2020: A year without precedent
Amid the COVID-19 pandemic, the value of Canada's annual merchandise exports decreased 12.4% in 2020 to $524 billion, while annual imports fell 8.5% to $561 billion. Consequently, the merchandise trade deficit with the world more than doubled from $15.4 billion in 2019 to $37.3 billion in 2020. When international trade in goods and international trade in services are combined, Canada's total trade deficit went from $36.9 billion in 2019 to $44.8 billion in 2020.
To explore Canada's international merchandise trade statistics for 2020 in an interactive format, see "The International Trade Explorer" and the "International merchandise trade monthly interactive dashboard."
Even before the effects of the pandemic, the year 2020 had already been marked by several events that affected Canada's international trade activity. By the end of 2019, a car assembly plant closed in Ontario; a strike in the rail industry impacted the movement of goods; and a pipeline rupture in North Dakota, which lasted for weeks, affected crude oil exports to the United States. Some export products were impacted by global trade tensions, and rail blockades threatened to further constrain Canada's merchandise trade. These events were overshadowed by lockdowns in early spring 2020 and their extraordinary impact on Canada's trade activity.
With the shutdown of several industries in Canada during the first wave of the pandemic in March, April and May, both exports and imports of goods and services fell to historic lows. Merchandise trade then recovered fairly quickly as goods-producing industries, in Canada and abroad, progressively reopened. Global demand for goods also remained strong, with households spending more on goods rather than on services, and with governments investing in infrastructure projects and providing financial assistance to support the economy.
Exports decreased 28.4% or $12.6 billion in April to $31.7 billion, the lowest level since 2009. Three months later, in July, exports were at $46.0 billion, $1.9 billion shy of the pre-pandemic levels in February. Exports continued to grow at a more typical pace for most of the remaining months, though they closed the year below February levels. Imports fell 24.1% in April and 3.4% in May, a combined decreased of $13.1 billion. They resurged in June (+20.1%) and July (+12.6%) and by October, import levels had surpassed February levels.
Canada's total merchandise trade activity (exports plus imports) was down from $1,212 billion in 2019 to $1,086 billion in 2020, a 10.4% decrease. Despite the downturn in merchandise trade activity in 2020, the impact was far below 2009 when the effects of the last major economic downturn were most strongly felt in annual merchandise trade. In 2009, total trade fell 20.4% compared with 2008.
The impact of the COVID-19 pandemic on merchandise trade varied significantly by product in 2020. On one hand, there were never-before-seen monthly declines in imports and exports of products such as motor vehicles and parts, which fell drastically in April when nearly all North American auto assembly plants were shut down for weeks. On the other hand, imports of consumer goods reached a record in 2020, supported mainly by rising imports of personal protective equipment.
The following sections include an overview of trade for products most affected by the 2020 pandemic. Products that not only weathered the effects of the pandemic, but also showed significant growth will also be reviewed.
Exports and imports of energy products had not fully recovered at the end of 2020
The COVID-19 pandemic created a vacuum in the demand for energy products. Activities that required energy products, such as commuting, travelling, powering office buildings and producing goods and services, were heavily affected by the restrictions put in place to fight the pandemic. This sudden drop in demand led to significant decreases in exports and imports of energy products in 2020.
Exports of energy products fell 36.6% in 2020 to $74.3 billion. The $42.9 billion annual decline represented the largest drop of all product sections in 2020. Exports of crude oil were responsible for more than three-quarters of that decrease.
Unlike other traded products that started to decline in March and April, crude oil exports began to fall in January, driven mainly by lower prices. Rail blockades in Canada, as well as the pandemic that began to unfold in some Asian and European countries, were already applying downward pressure on Canadian crude oil prices. Then, in March and April, exports of crude oil fell further when new restrictions were imposed across North America.
From December 2019 to April 2020, crude oil exports lost 83.8% of their value, mainly on lower prices. However, while prices rebounded partially in May and June, lower export volumes moderated the growth in export values. From May to December, exports of crude oil increased every month but one. However, by December 2020, exports of crude oil were still down 26.8% compared with December 2019. In nominal terms, this represented a $1.9 billion decrease, almost equalling the year-over-year gap in total exports for December.
Canadian refineries, which are the primary importers of crude oil, as well as the largest exporters of refined petroleum products, were also affected by the pandemic in 2020. Not only did energy prices decrease drastically in general, but refinery output was also affected by shutdowns and lower demand. As a result, imports of crude oil fell 39.4% in 2020, settling at $11.5 billion. Meanwhile, exports of refined petroleum products decreased 40.1%.
The declines in exports and imports of energy products were much stronger than those observed for total exports and imports. In fact, non-energy product exports decreased 6.5% in 2020, representing roughly half of the overall percentage decrease in total exports. In December 2020, exported volumes of energy products were almost back to December 2019 levels, but the gap in prices was stark.
With the introduction of vaccines suggesting a more positive economic outlook for 2021, demand for energy products may continue to rise. Meanwhile, tightening global supply and extreme weather events in the United States in early 2021 may also contribute to higher prices and values for Canadian energy products.
Trade in motor vehicles and parts decreases significantly
In the months after restrictions were first imposed in response to the pandemic, trade in motor vehicles and parts declined to historic lows. After dealing with sporadic closures in early March, the majority of North American vehicle manufacturers began shutting down operations indefinitely in the second half of the month. Engines and parts suppliers followed suit, with some adapting their operations to manufacture medical equipment.
Exports of motor vehicles and parts, which stood at $7.5 billion in February, before the restrictions began, settled at $1.1 billion in April, losing approximately 86% of their monthly value. Imports of motor vehicles and parts, originating in a lesser proportion from the United States, reached their lowest in level in May, down 81.8% compared with February.
Most North American production did not resume until the second half of May; however, production was slowed because of physical distancing measures and temporary shutdowns in response to positive COVID-19 tests. By July, exports of motor vehicles and parts had returned to levels similar to those reported before the pandemic.
Exports of motor vehicles and parts reached $8.2 billion in July, surpassing February levels by more than $700 million, as motor vehicle production ramped up to compensate for large losses in the previous months. Following that peak, exports of motor vehicles and parts declined every month but one, settling at $6.8 billion in December and ending the year below the pre-pandemic level.
In the second half of the year, assembly plants caught up with lost output and were back to producing at a pace that aligned with demand. With the low values of March, April, May and June, and the slow decline at the end of the year that followed the July recovery, exports of motor vehicles and parts totalled $74.2 billion in 2020, down 20.3% compared with 2019.
The situation was similar on the import side. Imports of motor vehicles and parts reached $8.4 billion in July, 9.2% below the prepandemic level of $9.2 billion in February. Despite this recovery in July, imports of motor vehicles and parts did not reach the February mark again in 2020. As was the case with exports, production levels tapered off in the latter part of 2020 to align with lower demand, which was reduced by the effects of the pandemic. Imports of motor vehicles and parts totalled $87.4 billion in 2020, down 24.0% compared with 2019.
In the wake of the events of 2020, recent announcements appear likely to shape automotive manufacturing in Canada going forward. The Oshawa plant reopened at the end of 2020 to build pick-up trucks, and new investments were announced by automotive producers, alongside federal and provincial governments, for the production of electric powered commercial vehicles and passenger cars in Canada.
This situation contrasts significantly with the one that occurred in response to the 2009 downturn, when Canadian automotive plants were shuttered and exports experienced a structural decline. In 2021 however, headwinds created by the global shortage of semi-conductor chips could limit production capacity and trade of motor vehicles and parts.
Exports of farm products increase on higher global demand
In contrast to motor vehicles and parts and energy products, farm, fishing and intermediate food products showed strong export growth despite the pandemic. Notwithstanding the economic downturn that was caused by the pandemic, high global demand and advantageous market conditions for grain, oilseeds, pulse crops and soybeans benefitted Canadian exporters, who shipped record volumes abroad in 2020.
Following a decrease in 2019—a year marked by a rail strike and trade tensions— exports of farm, fishing and intermediate food products rebounded strongly in 2020, up 14.9% to a record high $43.6 billion. Higher prices had an impact in 2020, but the growth in nominal terms was mainly volume-driven. Exports of canola, wheat, pulse crops (such as peas and lentils) and other crop products (such as soybeans) all posted strong increases and contributed to the overall growth.
The Canadian agriculture sector is highly dependent on rail movements within the country, as grain and oilseed are loaded onto rail cargo containers from inland terminals and transported to major export ports. The 2020 growth coincided with a recent increase of availability in the rail system in Canada, partly attributable to lower shipments of other products during the pandemic. For example, on a customs basis, exports of crude oil to the United States by rail fell 41.7% in quantity in 2020 compared with 2019. Other factors, such as limited international supplies (caused by trade disputes and bad crop years in other countries, for example), a good crop year in Canada in 2020 and an upgrade of the capacity of the rail system, also contributed to favourable conditions for Canadian exporters.
One-third of the gain in exports of farm, fishing and intermediate food products in 2020 was attributable to higher exports to China, which rose 38.0%. This increase follows a year in which China drastically reduced its imports of canola and soybeans from Canada. In 2020, exports of farm, fishing and intermediate food products to China were still 23.1% below the record levels observed in 2018. Higher exports to Europe also contributed the overall gain in exports of farm, fishing and intermediate food products in 2020.
Canada's Outlook for Principal Field Crops, published by Agriculture and Agri-Food Canada's in February 2021, reported that the 2021/2022 crop year (August 2021 to July 2022) may be characterized by lower Canadian production and inventories, as well as by higher global production. Combined, these factors could result in lower exports of farm products. However, exports for this product section remained strong at the beginning of 2021, with increases in the two first months of the year, including a record high in February.
High demand for gold in times of economic uncertainty
Imports of metal and non-metallic mineral products surged 25.6% in 2020. Imports of unwrought gold, silver, and platinum group metals and their alloys—a subcategory mainly composed of gold – reached $15.3 billion in 2020, almost five times higher compared with the previous year. This more than offset the widespread decreases in the other subcategories of the product section. Although prices were up, this increase was mainly volume-driven. Gold is a safe haven asset in times of economic uncertainty, and this surge in imports reflected higher Canadian demand for gold amid the turbulence caused by the pandemic. In 2009, during the last major economic downturn, annual imports of unwrought gold, silver, and platinum group metals and their alloys increased 49.6%.
Roughly two-thirds of the 2020 increase in gold imports was attributable to higher purchases of gold for which a change in ownership occurred without the gold being physically brought into the country. The growth in these imports was mainly with the United States and Switzerland. The remainder of the increase was on higher imports of gold physically entering the country. These types of imports are mainly the result of banks acquiring assets, but refiners also import and process gold to a higher degree of purity, often subsequently exporting it again. The growth in physical imports of gold was mainly the result of higher imports from Brazil.
Exports of metal and non-metallic mineral products (+2.5%) also increased in 2020 despite the pandemic. Again, exports of the product subcategory unwrought gold, silver, and platinum group metals and their alloys (+16.0%) more than offset the widespread declines within the product section. As with imports, the growth in exports was mainly attributable to higher gold transactions without the physical movement of the goods, with higher exports to the United States and Switzerland. Physical exports of gold also increased, in large part because of higher exports to the United States and the United Kingdom.
International trade in gold is highly volatile and dependent on multiple factors. While a brighter economic outlook for 2021, ushered in by COVID-19 vaccines and the easing of restrictions, could lead to lower global demand for gold, other factors, such as prolonged low interest rates, could help sustain high demand.
Imports of consumer goods reach record highs on a surge in imports of personal protective equipment
Imports of consumer goods reached a record high $127.2 billion in 2020, up 1.4% from 2019. The main contributors to the gain were imports of carpets, textile furnishings and other textile products, as well as miscellaneous goods and supplies. The increases in these commodity groups resulted from the pandemic, as many types of personal protective equipment are classified under these categories.
COVID-19 pandemic-related products more than offset declines in imports of other consumer goods categories
From 2019 to 2020, imports of carpets, textile furnishings and other textile products climbed 42.6% to reach $5.8 billion, making this the largest increase in a decade. The surge was led by imports of face masks of textile materials, mainly from China, which skyrocketed from $2.0 million in 2019 to $1.5 billion in 2020, a 750-fold increase.
Imports of miscellaneous goods and supplies increased 10.8% to $21.0 billion in 2020. The gains were attributable to imports under a category that includes respirator masks. In addition, imports of protective suits surpassed $600 million in 2020, up from $36 million the previous year.
These increases were partly offset by lower imports of clothing, footwear and accessories, which fell by 19.2% in 2020 to $15.7 billion. This was the first annual decrease for imports of this product group in 10 years. The most significant declines were in the second quarter of 2020, when imports of clothing, footwear and accessories fell 32.8% compared with the first quarter. This coincided with the beginning of restrictions to curtail the spread of COVID-19, such as the closure of non-essential businesses.
Imports of consumer goods reached a record in 2020, but if Canada becomes less dependent on other countries for personal protective equipment, such as face masks, and as supplies for these goods stabilize to meet demand, this could drive imports of consumer goods down in 2021. On the other hand, if retail activity, especially clothing, recovers as vaccines become more widely available and restrictions ease, this could contribute to higher import values.
Lower trade surplus with the United States, and lower deficit with other countries
Exports to the United States fell 15.7% to $376.2 billion in 2020, the lowest annual value since 2013. Most of this decline was attributable to lower exports of energy products and motor vehicles and parts. Imports from the United States were down 10.9% to $349.3 billion, also the lowest annual value since 2013. Similar to exports, lower imports of motor vehicles and parts and energy products accounted for most of this decline.
Exports to countries other than the United States decreased by 2.6% to $147.9 billion in 2020. Lower exports to Hong Kong (gold), Mexico (various products) and Saudi Arabia (other transportation equipment) were partially offset by higher exports to Switzerland (gold) and China (iron ores and concentrates and farm products).
Imports from countries other than the United States fell 4.3% to $212.1 billion. The decrease was led by lower imports from Mexico (motor vehicle engines and parts) and Japan (passenger cars and light trucks). Higher imports from China (personal protective equipment and other consumer goods) and Switzerland (gold) partly offset the overall decline.
The difference in the annual results for trade between the United States and the other countries is primarily because the two product sections hardest hit by the pandemic in 2020—motor vehicles and parts, as well as energy products—are mainly traded with the United States.
Canada's merchandise trade deficit with the world more than doubled, widening from $15.4 billion in 2019 to $37.3 billion in 2020. This was entirely attributable to Canada's trade surplus with the United States, which narrowed from $54.4 billion in 2019 to $26.9 billion in 2020, the lowest surplus in over a decade. By comparison, Canada's trade deficit with the rest of the world narrowed from $69.7 billion in 2019 to $64.2 billion in 2020.
Exports to the United States represented 71.8% of Canada's exports to the world in 2020, down from 74.6% in 2019. Meanwhile, the share of Canada's imports from the United States decreased from 63.9% in 2019 to 62.2% in 2020. The share of Canada's imports from the United States peaked at 77.0% in 1998, while the share of Canada's exports to the United States peaked at 83.9% in 2002.
Using the Herfindahl-Hirschman concentration index (HHI), Canadian goods sold abroad were more diversified in terms of market of destination in 2020 (HHI=0.53) than in 2019 (HHI=0.56). The HHI was at its lowest since 2011, meaning that, according to this index, Canadian exports were more diversified than in any year since then. A stronger decline in exports to the United States versus exports to countries other than the United States was the reason for the higher diversification of Canadian exports in terms of market of destination.
Canada's international trade in services falls in 2020
As was the case for Canada's international trade in goods, Canada's international trade in services was affected by the pandemic in 2020. On an annual basis, Canada's international imports of services declined 24.0% to $122.3 billion, and exports were down 17.7% to $114.7 billion. In comparison, during the economic downturn of 2008-2009, Canada's international trade in services declined for exports (-2.2%) and imports (-0.3%) from 2008 to 2009.
Canada's international trade in services deficit narrowed significantly from $21.5 billion in 2019 to $7.6 billion in 2020. However, the declines in 2020 related to the pandemic did not affect every service category equally.
COVID-19 restrictions lead to large declines in travel services and transportation services
Imports of travel services fell 65.9% to $16.2 billion in 2020, while exports decreased 59.4% to $15.1 billion. Imports of transportation services declined 27.9% to $23.4 billion in 2020 and exports were down 26.6% to $13.6 billion.
To help prevent the spread of COVID-19, travel restrictions and border closures were enacted in March 2020. On March 13, the Government of Canada advised all Canadians to avoid all non-essential travel abroad. Further restrictions were implemented for entry into the country by non-residents, other than those of the United States, on March 18, and these were extended to United States residents on March 20.
These measures contributed to large monthly decreases in March 2020 for both imports and exports of travel services, as well as to declines for imports and exports of transportation services. This was followed by further declines in April, so that travel services imports had fallen from $4.7 billion in February to $331 million in April, and exports had decreased from $2.2 billion to $1.2 billion. Imports for transportation services fell from $2.5 billion to $1.7 billion, while exports fell from $1.4 billion to $949 million. Travel services imports remained well below their February level for the rest of the year.
Education-related travel services were less affected by the pandemic than other travel services, declining 14.5% on an annual basis for imports and 11.3% for exports. The smaller decline for education-related travel services reflected, in part, non-resident students studying in Canada and Canadian resident students already studying abroad choosing to remain in the countries in which they studied during the pandemic and thus continuing to receive education services to some extent. The tuition fees portion of the expenses of students who remained in their country of residence while studying remotely at institutions in other countries are counted as commercial services as opposed to travel services, specifically the personal, cultural and recreational services sub-category.
The impact of the pandemic on transportation services differed by component, specifically between transportation services related to the transportation of travellers and those related to the transportation of goods. The former experienced large declines in March and April, and did not experience much, if any, rebound during the rest of the year.
Transportation services related to the transportation of goods declined at the onset of the pandemic (April and May for imports, and March and April for exports), but recovered in subsequent months such that exports in December were above their February level and imports were slightly below their February level.
Overall, transportation services imports in April were 33.9% below their February level and exports were 32.1% below their February level. Imports and exports partially rebounded the rest of the year, such that, in December they were still 27.7% and 17.2% below February levels, respectively.
It is unlikely that significant increases will be seen for either travel services or passenger fares until COVID-19 related travel restrictions and border closures are lifted. For additional information on the international movement of travellers entering into and returning to Canada in 2020, please see Crossing the border during the pandemic: 2020 in review.
Commercial services increase and government services decline in 2020
In contrast to the large annual declines for travel services and transportation services, exports of commercial services increased 3.3% to $84.5 billion in 2020, while imports rose 2.5% to $81.3 billion.
As was the case for many other countries, imports and exports of commercial services were not as affected by the COVID-19 pandemic as other service categories. Unlike travel services and transportation services, many commercial services can be delivered remotely, something that likely contributed to their greater resilience. For additional information on commercial services by mode of supply, please see Canada's services exports through the lens of digital trade.
At the onset of the pandemic there were increases in the financial services component of commercial services for both imports and exports. These increases reflected, in large part, higher commissions on securities trading linked to increased financial market activity during the early stages of the pandemic. Trade in non-financial services components declined during the first half of 2020, before more than recovering in the second half to end up with an annual increase for 2020 as a whole. Education services delivered online to international students who chose not to, or were unable to, travel to Canada for school and instead stay in their home countries contributed to the increase in exports the last part of the year.
Exports of government services fell 17.5% to $1.4 billion in 2020, while imports declined 11.5% to $1.4 billion.
Merchandise trade: Canada's 10 principal trading partners – Balance of payments basis, current dollars
Merchandise trade: North American Product Classification System – Balance of payments basis, current dollars
Note to readers
Export diversification refers to the extent to which Canada's export base is broad, in terms of trading partner countries, products, or provinces of production. A concentration index, the Herfindahl-Hirschman index (HHI), has been used as an inverse measure of export diversification. For more information on export diversification, see Measuring Canadian export diversification.
International trade data by commodity are available on both a balance of payments (BOP) and a customs basis. International trade data by country are available on a customs basis for all countries and on a BOP basis for Canada's 27 principal trading partners (PTPs). The list of PTPs is based on their annual share of total merchandise trade (imports plus exports) with Canada in 2012. BOP data are derived from customs data by making adjustments for factors such as valuation, coverage, timing and residency. These adjustments are made to conform to the concepts and definitions of the Canadian System of National Accounts.
Customs based data were used in the analysis of Canada's trade in commodities with its trading partners. The data for the remainder of the analysis are on a BOP basis, seasonally adjusted and in current dollars, unless otherwise indicated.
Constant dollars are calculated using the Laspeyres volume formula (2012=100).
Prices are calculated using the Paasche price index (2012=100).
Data in this release are available in Tables 12-10-0011-01, 12-10-0121-01, 12-10-0129-01 and 12-10-0144-01, and the Canadian International Merchandise Trade Database.
International merchandise trade data for reference year 2020 is subject to revision with the upcoming releases of the monthly Canadian international merchandise trade for the March, April, and October reference months.
International trade in services data referenced in this text are preliminary and subject to revision with the coming releases of the quarterly Balance of International Payments in May and the Annual Trade in Services release in October.
Monthly data on Canadian international merchandise and services trade for March will be released on May 4.
For more information, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca).
To enquire about the concepts, methods or data quality of this release, contact Benoît Carrière (613-951-4636; STATCAN.mediahotline-ligneinfomedias.STATCAN@canada.ca), International Accounts and Trade Division
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