Research to Insights: Canada's Economy During Recent Canada-U.S. Trade Developments

About Research to Insights

The Research to Insights series of presentations features a broad range of findings on selected research topics. Each presentation draws from and integrates evidence from various studies that use innovative and high-quality data and methods to better understand relevant and complex policy issues.

Based on applied research of valuable data, the series is intended to provide decision makers, and Canadians more broadly, a comprehensive and horizontal view of the current economic, social and health issues we face in a changing world.

Context

• This presentation provides an integrated summary of recent economic developments, highlighting key movements in the economic data during the current trade conflict. It focuses on how economic conditions have changed as trade tensions between Canada and the United States continue to unfold.
• The slowdown in Canada–U.S. trade has acutely affected Canadian manufacturers that rely heavily on U.S. demand. Manufacturing output contracted in the spring as export volumes and investment in machinery and equipment scaled back. Some businesses have begun to pass on increased costs from tariffs to their customers, while many have undertaken mitigation strategies to lessen the impact of tariff disruptions. The overall impact of the trade conflict on consumer prices remains difficult to gauge. 
• Canada’s labour market has cooled as businesses adjust to heightened uncertainty. While layoff rates have remained comparable to rates observed before the trade conflict, hiring intentions have weakened as many unemployed workers struggle to find work. Young workers and students have experienced a particularly difficult labour market.
• Political tensions between Canada and the United States continue to affect the travel plans of Canadians as discretionary automobile trips to the United States remain down by more than one-third.

Trade and business investment contract, while households continue to spend

• Export volumes expanded as tariff threats intensified in early 2025, supporting economic growth in the first quarter.
• Export volumes plunged 7.5% in the second quarter, the largest decline since 2009, excluding the COVID-19 pandemic period.
• Real gross domestic product contracted 0.4% after six quarters of growth. 
• Business labour productivity fell 1.0%.
• Import volumes fell in the second quarter as businesses scaled back investment in machinery and equipment (-9.4%).
• Almost half of capital spending on machinery and equipment depends on imports from the United States.
• In the third quarter, about one in six exporters planned to delay investment or expansion.
• Increases in household spending—led by higher outlays on new vehicles—partly mitigated the declines in trade and business investment.

Data table for Chart 1

Data table for chart 1
Table summary
This table displays the results of Data table for chart 1 First quarter of 2025 and Second quarter of 2025, calculated using percentage point contribution units of measure (appearing as column headers).

	First quarter of 2025	Second quarter of 2025
	percentage point contribution
Notes: Data on gross domestic product are quarterly percentage changes. All other data are percentage-point contributions to the quarterly change in real gross domestic product. Source: Statistics Canada, table 36-10-0104-01.
Gross domestic product at market prices	0.504	-0.398
Household final consumption expenditure	0.070	0.595
Business investment—residential structures	-0.248	0.115
Business investment—non-residential structures	-0.053	0.082
Business investment—machinery and equipment	0.077	-0.306
Business investment—intellectual property products	-0.009	-0.003
General governments final consumption expenditure	-0.023	0.276
Investment in inventories	0.528	0.806
Exports—goods and services	0.467	-2.462
Imports—goods and services	-0.293	0.434

Slower wage growth: Aggregate wage growth slowed (+0.2%) in the second quarter—the slowest pace since 2016, excluding the pandemic period. The Bank of Canada’s second-quarter Business Outlook Survey found that many businesses anticipated slower wage growth because of weak demand and slower inflation, while cost pressures linked to the trade conflict persisted.

Larger merchandise trade deficits as Canada and U.S. shipments scaled back

• Canada’s exports to the United States fell almost 16% in April 2025 and were 26% lower than levels at the start of the year, when U.S.-bound shipments surged in anticipation of tariffs.
• April’s decline was broad-based, reflecting lower shipments of motor vehicles and parts, consumer goods, energy products, and industrial machinery and equipment.
• Exports to the United States partly rebounded in the following months. However, shipments to the U.S. fell in August they remained 10% below levels reported in late 2024 before exports ramped up because of impending tariffs.
• Exports of unwrought aluminum and aluminum alloys in August were down 26% from levels reported last November, while shipments of basic and semi-finished iron or steel products fell 40%.

Data table for Chart 2

Data table for chart 2
Table summary
This table displays the results of Data table for chart 2 Exports and Imports, calculated using index (January 2024=100) units of measure (appearing as column headers).

	Exports	Imports
	index (January 2024=100)
Source: Statistics Canada, table 12-10-0011-01.
2024
January	100.0	100.0
February	104.5	102.6
March	101.6	101.5
April	103.8	103.5
May	104.0	102.1
June	104.9	104.2
July	106.3	100.9
August	101.4	102.0
September	102.5	102.3
October	100.3	102.7
November	107.2	107.0
December	112.9	106.5
2025
January	120.0	108.1
February	115.4	111.4
March	105.0	107.5
April	88.4	97.4
May	88.9	97.3
June	91.4	98.9
July	96.6	96.7
August	93.3	95.3

Earnings from trade: Canada’s merchandise trade surplus with the United States narrowed from $31.7 billion in the first quarter to $10.9 billion in the second. Meanwhile, Canada’s merchandise trade deficit with the world rose from $0.3 billion to $18.7 billion.

Export dependence on the United States: In 2024, 76% of Canada’s merchandise exports were destined for the United States. The share of exports going to the United States fell below 70% in April and May 2025 as the trade conflict escalated, before rebounding to 73% by July. After reaching a record high in May, non-U.S. exports declined in recent months. As of August, they were 0.5% below levels at the end of 2024. 

Economy-wide output edges lower as tariffs weigh on manufacturers and wholesalers

• Economy-wide output edged steadily lower from April to June, the first three-month span of consecutive declines since late 2022.
• After advancing in the first quarter, manufacturing output and wholesaling activity contracted in the second quarter as tariffs weighed on cross-border trade. Over half of manufacturers and one-third of wholesalers expect rising input costs for labour, raw materials or energy to be an obstacle in the coming months.             
• Impacts were widespread: in April, 54% of manufacturers reported being impacted by tariffs, along with 44% of wholesalers. The share of businesses affected by tariffs edged lower in May and June.
• Lower oil and gas extraction also impacted economic activity in the second quarter as production was affected by wildfires and maintenance activity. Declines in electric power generation, transmission and distribution were also a factor. 

Data table for Chart 3

Data table for chart 3
Table summary
This table displays the results of Data table for chart 3 All industries , Goods industries and Service industries, calculated using index (January 2023=100) units of measure (appearing as column headers).

	All industries	Goods industries	Service industries
	index (January 2023=100)
Source: Statistics Canada, table 36-10-0434-01.
2023
January	100	100	100
February	100	100	100
March	100	101	100
April	100	101	100
May	101	100	101
June	100	100	101
July	100	100	101
August	101	100	101
September	101	99	101
October	101	100	101
November	101	100	101
December	101	100	101
2024
January	101	99	102
February	102	100	102
March	102	100	102
April	102	100	103
May	102	100	103
June	102	100	103
July	102	100	103
August	102	100	103
September	103	100	104
October	103	101	104
November	103	100	104
December	103	100	104
2025
January	103	101	104
February	103	101	104
March	103	101	104
April	103	100	104
May	103	100	104
June	103	100	104
July	103	100	104

Retail spending strengthens: While about one-third of retailers reported being impacted by tariffs in the second quarter, retail volumes rose on broad-based gains across store types. Retail volumes have steadily expanded for five consecutive quarters.

Employment growth stalls as uncertainty weighs on hiring intentions

• Employment edged up 22,000 (+0.1%) during the first nine months of 2025, following a net increase of 217,000 (+1.0%) during the last nine months of 2024.
• Since the end of 2024, employment has declined in business, building and other support services (-59,000) and information, culture and recreation (-22,000), while employment has increased in finance, insurance, real estate, rental and leasing (+57,000).
• There has been no net employment growth from February to August 2025. Similarly, the number of payroll jobs in June 2025 was below levels reported at the start of the year.
• Statistics Canada’s Canadian Survey on Business Conditionsfor the third quarter found that just over half of Canadian businesses anticipate being able to maintain their current level of staffing over the next year or longer if the current tariff environment continues.

Data table for Chart 4

Data table for chart 4
Table summary
This table displays the results of Data table for chart 4 Public sector employees and Private sector employees, calculated using percentage units of measure (appearing as column headers).

	Public sector employees	Private sector employees
	percentage
Source: Statistics Canada, table 14-10-0288-01.
2022
January	5.7	6.4
February	5.1	6.7
March	4.0	5.4
April	5.2	7.3
May	6.0	7.8
June	5.0	5.5
July	4.5	5.1
August	4.5	4.2
September	2.9	3.4
October	4.1	3.3
November	3.0	2.8
December	1.9	2.9
2023
January	2.6	5.4
February	2.2	3.4
March	2.4	3.5
April	2.5	3.0
May	1.1	3.5
June	1.3	4.1
July	2.2	3.8
August	2.6	3.8
September	2.5	3.9
October	2.5	3.4
November	2.4	3.7
December	3.3	3.2
2024
January	4.0	2.3
February	4.4	1.9
March	4.2	1.6
April	4.1	2.0
May	4.1	1.8
June	3.7	1.4
July	4.4	1.0
August	3.9	1.3
September	2.5	1.4
October	1.7	1.4
November	3.1	1.0
December	3.5	1.2
2025
January	2.4	1.6
February	2.3	1.7
March	2.1	1.3
April	2.4	0.7
May	2.0	1.1
June	2.5	1.3
July	1.4	1.3
August	1.1	1.0
September	2.4	0.9

The pace of employment growth in the private sector, measured year over year, slowed before the trade conflict and has been below 2% for the past 17 months. Employment growth among public sector employees has eased considerably in 2025.

Unemployment trends higher as unemployed workers struggle to find jobs

• The unemployment rate rose to 7.1% August, 0.5 percentage points higher than in January 2025. The unemployment rate held steady in September. This was the highest rate since May 2016, excluding the pandemic period.
• Returning students faced another difficult labour market this summer, with the unemployment rate averaging 17.9% from May to August. Excluding the pandemic period, this was the highest unemployment rate for returning students since the summer of 2009 (18.0%).
• While aggregate layoff rates have remained similar to those observed before the trade conflict, hiring intentions have softened. Of those unemployed in July, 15.2% found employment in August, which is lower than the proportion (23.3%) reported for the same months from 2017 to 2019. 

Data table for Chart 5

Data table for chart 5
Table summary
This table displays the results of Data table for chart 5 15 to 24 years, 25 to 54 years and 55 years and over, calculated using index (February 2020=100) units of measure (appearing as column headers).

	15 to 24 years	25 to 54 years	55 years and over
	index (February 2020=100)
Source: Statistics Canada, table 14-10-0342-01.
2020
February	100.0	100.0	100.0
March	86.9	92.3	77.2
April	75.4	88.4	67.0
May	94.2	98.3	73.4
June	100.4	120.4	90.6
July	159.2	142.6	133.0
August	176.9	143.6	122.5
September	269.6	183.1	142.1
October	277.7	252.0	201.4
November	287.3	243.1	219.3
December	315.0	292.3	239.4
2021
January	317.7	309.9	215.3
February	268.8	289.8	248.5
March	244.6	299.6	236.7
April	254.2	295.5	256.0
May	281.2	274.2	263.1
June	219.6	294.4	256.1
July	211.2	258.8	242.2
August	191.2	242.9	233.0
September	141.9	242.5	227.3
October	140.8	213.6	230.1
November	122.7	169.8	181.5
December	96.5	170.6	183.8
2022
January	120.0	136.8	162.2
February	91.2	121.2	125.5
March	109.2	126.7	126.7
April	101.2	128.5	117.3
May	65.0	131.7	93.6
June	76.9	119.7	89.8
July	53.8	109.6	93.2
August	60.4	114.8	103.2
September	61.5	97.1	99.8
October	63.8	99.7	96.6
November	85.8	99.4	87.9
December	53.1	98.6	86.3
2023
January	92.3	90.8	88.9
February	61.2	103.8	70.2
March	77.7	109.4	72.2
April	117.3	90.4	78.1
May	139.2	105.4	74.5
June	97.7	90.1	86.8
July	103.5	99.5	87.9
August	61.5	104.7	82.5
September	96.9	104.8	89.5
October	131.2	123.6	89.5
November	124.2	120.0	88.4
December	150.4	124.8	92.7
2024
January	113.8	142.8	81.3
February	155.8	154.7	76.8
March	157.3	166.2	83.6
April	165.8	157.6	80.2
May	150.8	161.7	102.3
June	190.0	158.4	92.7
July	186.9	166.4	101.2
August	246.2	178.0	113.9
September	240.4	178.9	103.4
October	246.9	198.6	108.6
November	218.5	209.8	131.0
December	278.5	196.5	115.2
2025
January	240.4	211.9	135.5
February	293.5	202.0	129.6
March	279.6	227.5	123.5
April	285.4	216.4	120.0
May	276.5	230.0	117.6
June	230.0	221.1	121.9
July	317.3	237.1	114.3
August	286.2	238.4	116.4
September	274.6	226.7	134.0

Longer-duration unemployment on the rise: The share of young workers who are experiencing long-term unemployment (those unemployed for 27 weeks or more) rose from 14.5% at the start of 2025 to 16.3% in August. The share among core-aged workers rose by one percentage point over the same period. 

Businesses pursue mitigation strategies to deal with the disruptive effects of tariffs

• One-third of businesses that sold goods or services to the United States reported that their specific products had tariffs applied, with slightly over half indicating that tariffs had a negative impact on their business.
• Nine in 10 manufacturers that export to the United States plan to take actions over the next 12 months, with 1 in 3 seeking alternative customers outside the United States.
• About four in five businesses that import from the United States plan to take actions over the next 12 months.
• Half of manufacturers that import from the United States plan to seek alternative suppliers outside the United States, while nearly half plan to increase domestic sourcing.

Data table for Chart 6

Data table for chart 6
Table summary
This table displays the results of Data table for chart 6 Exported goods to the United States and Imported goods from the United States, calculated using percent units of measure (appearing as column headers).

	Exported goods to the United States	Imported goods from the United States
	percent
Source: Statistics Canada, Canadian Survey on Business Conditions. For additional information, see Sood (2025).
Lay off employees	9.6	6.0
Delay Canadian investment or expansion plans	12.5	13.6
Delay major investments or expenditures	16.5	17.9
Planned actions over the next 12 months by business or organization as a result of any tariffs applied by the United States on imports from Canada, unknown	18.0	11.8
Increase domestic sourcing	23.7	32.6
Seek alternative suppliers outside the United States	23.8	35.9
Seek alternative customers outside the United States	24.2	14.2
Raise prices of goods or services	24.5	28.5
Planned actions over the next 12 months by business or organization as a result of any tariffs applied by the United States on imports from Canada, none	25.5	18.6

The ongoing tariff environment between the United States and Canada presents a significant challenge for many Canadian businesses. In 2024, about 46,000 establishments exported goods to the United States, while about 115,600 imported products from the United States.

Railway carloadings from U.S. connections pull back following the implementation of tariffs

• In June 2025, freight from U.S. connections, measured year over year, was down 17.3% (-651 000 tonnes) to 3.1 million tonnes, the fifth straight month of double-digit declines.
• Merchandise trade exports by rail to the United States were down 27% year over year in July 2025, reflecting declines in motor vehicle and parts shipments (-29%) and in shipments of metal and non-metallic mineral products (-40%).
• Merchandise trade imports by rail from the United States were down 16.7% year over year in July 2025. The decrease in imports again reflected lower shipments of motor vehicles and parts (-16.2%) and basic and industrial chemical, plastic and rubber products (-17.2%).

Data table for Chart 7

Data table for chart 7
Table summary
This table displays the results of Data table for chart 7 Total traffic carried and Total traffic received from U.S. connections, calculated using year-over-year percentage change units of measure (appearing as column headers).

	Total traffic carried	Total traffic received from U.S. connections
	year-over-year percentage change
Source: Statistics Canada, table 23-10-0216-01.
2024
January	-6.9	-7.0
February	6.3	1.0
March	-2.8	2.9
April	4.1	11.0
May	5.3	8.9
June	7.0	5.4
July	5.1	10.2
August	-7.2	-11.1
September	1.2	2.1
October	1.7	-7.8
November	-4.5	-10.7
December	-0.8	-3.4
2025
January	8.3	9.0
February	-12.7	-26.1
March	1.9	-15.1
April	-0.9	-22.0
May	0.9	-11.8
June	-2.8	-16.4
July	-0.4	-19.2

In 2023 and 2024, rail freight traffic from U.S. connections represented an average of 12.0% of total rail tonnage each month. During the first half of 2025, freight volumes from U.S. connections accounted for 10.6% of total rail tonnage.

Canadian automobile travel to the United States pulls back by over one-third as domestic travel rises

• July 2025 marked the sixth straight month that travel abroad by Canadian residents declined on a year-over-year basis. By July, the number of Canadian-resident return trips from the United States by air or automobile was down 32.4%, while the number of trips to Canada by U.S. residents had fallen by 3.0%.
• For the second time since June 2006 (excluding the pandemic), more U.S. residents made trips to Canada than Canadian residents travelled to the United States.
• Preliminary data shows that by September, Canadian resident travel to the United States by automobile, measured year over year, had fallen for nine consecutive months. Overall, the total number of Canadian-resident return trips by automobile through the first nine months of 2025 was down 31.1% from levels reported in the first nine months of 2024.

Data table for Chart 8

Data table for chart 8
Table summary
This table displays the results of Data table for chart 8 Excursionists (same-day) and Tourists (overnight), calculated using year-over-year percentage change units of measure (appearing as column headers).

	Excursionists (same-day)	Tourists (overnight)
	year-over-year percentage change
Note: The red line indicates the beginning of the new U.S. administration. Source: Statistics Canada, table 24-10-0057-01.
2024
January	13.4	8.2
February	25.7	10.5
March	26.3	19.0
April	16.5	-2.1
May	18.7	2.8
June	11.5	14.5
July	4.8	2.4
August	6.6	3.4
September	7.1	9.8
October	7.9	-2.6
November	9.9	-1.9
December	1.8	17.8
2025
January	4.3	-10.0
February	-25.6	-16.9
March	-36.0	-25.6
April	-40.5	-26.2
May	-40.3	-34.3
June	-35.0	-29.5
July	-34.7	-39.6
August	-32.4	-35.6
September	-32.9	-37.7

Domestic tourism ramps up: Domestic travel within Canada rose 2.2% year over year to 67.6 million trips in the first quarter of 2025. Spending on domestic tourism reached $13.8 billion, up 4.4% from the first quarter of 2024. In the same quarter, U.S. residents took 3.4 million trips to Canada (+1.2% year over year) while spending totalled $2.5 billion (+27.3%).

Business activity continues to trend lower in sectors heavily dependent on U.S. demand

• While overall business activity in sectors less exposed to trade has remained relatively stable, businesses operating in sectors that are more dependent on U.S. demand, including manufacturing and mining, quarrying, and oil and gas extraction, have experienced declines.
• From January 2024 to June 2025, the number of active businesses in sectors highly dependent on U.S. demand fell 1.9%, compared with a decline of 0.6% in other sectors.
• Steady declines in sectors closely tied to U.S. demand were underway before the current trade conflict, suggesting that other factors, such as shifting global demand or domestic industry dynamics, could also be at play. Continued declines into 2025 may reflect added pressures from the evolving trade environment.

Data table for Chart 9

Data table for chart 9
Table summary
This table displays the results of Data table for chart 9 Sectors dependent on U.S. demand and Other sectors, calculated using index (January 2024=100) units of measure (appearing as column headers).

	Sectors dependent on U.S. demand	Other sectors
	index (January 2024=100)
Source: Statistics Canada, table 33-10-0270-01.
2024
January	100.0	100.0
February	100.0	99.9
March	99.9	99.9
April	99.9	99.9
May	99.8	99.9
June	99.6	99.8
July	99.5	99.8
August	99.4	99.7
September	99.2	99.7
October	99.1	99.6
November	98.8	99.3
December	98.9	99.6
2005
January	98.7	99.5
February	98.4	99.4
March	98.2	99.3
April	98.2	99.4
May	98.2	99.4
June	98.1	99.4

Sectors dependent on U.S. demand were defined as those where 35% or more of the value added comes from the U.S. demand for Canadian exports.

Overall impact of tariffs on consumer prices difficult to gauge as consumers and businesses navigate trade tensions

• Headline inflation remained below 2% from April to August 2025 largely because of the elimination of the consumer carbon levy. Excluding energy prices, consumer price growth averaged 2.7% during this period.
• Prices for various consumer goods have been directly or indirectly affected by tariffs, including new cars, clothing and footwear, certain household appliances, a range of grocery items, and travel services.
• In the third quarter of 2025, one-quarter of businesses reported passing cost increases attributable to tariffs onto their customers over the past six months, while nearly two-fifths (39.4%) of businesses reported being very likely or somewhat likely to pass on costs to their customers over the next 12 months.

Data table for Chart 10

Data table for chart 10
Table summary
This table displays the results of Data table for chart 10 2023, 2024 and 2025, calculated using index (2002=100) units of measure (appearing as column headers).

	2023	2024	2025
	index (2002=100)
Note ... not applicable Source: Statistics Canada, table 18-10-0004-01.
January	103	104	104
February	103	104	105
March	104	104	105
April	105	104	106
May	104	104	106
June	105	103	106
July	105	103	106
August	105	103	106
September	104	103	... not applicable
October	105	104	... not applicable
November	105	103	... not applicable
December	104	103	... not applicable

The Bank of Canada has noted that the extent to which U.S. tariffs and Canadian counter-tariffs pass through into consumer prices depends on demand and inflation expectations. The Bank’s analysis of Canada’s 2018 tariff conflict with the United States found that the “pass through from price increases to consumer goods was high but incomplete.”

Canadian investors increase their exposure to U.S. securities as foreign investment in Canadian securities pulls back

• Foreign investors steadily reduced their exposure to Canadian securities from February to May 2025, leading to a divestment of $22.4 billion during the first half of 2025. This divestment in part reflected reduced holdings of Canadian shares by U.S. investors.
• Meanwhile, Canadian investors steadily increased their exposure to foreign securities from February to June, leading to an outward investment of $63.3 billion during the first half of the year. This was driven by acquisitions of U.S. equities and fund shares and U.S. bonds.
• Taken together, these investment transactions generated a net outflow of funds of $85.9 billion from the Canadian economy during the first half of 2025.
• In 2024, international investments in securities generated a net inflow of funds into the Canadian economy, totalling $79.9 billion.
• Foreign investors acquired $52.6 billion of Canadian securities during July and August, while Canadian investors added $36.9 billion in foreign securities.

Data table for Chart 11

Data table for chart 11
Table summary
The information is grouped by (appearing as row headers), Net acquisitions of Canadian securities by foreign investors, Net acquisitions of U.S. securities by Canadians investors and Net acquisitions of non-U.S. foreign securities by Canadian investors , calculated using millions of dollars units of measure (appearing as column headers).

2025	Net acquisitions of Canadian securities by foreign investors	Net acquisitions of U.S. securities by Canadians investors	Net acquisitions of non-U.S. foreign securities by Canadian investors
	millions of dollars
Source: Statistics Canada, table 36-10-0028-01.
January	8,913	-9,139	6,151
February	-10,533	32,142	-8,291
March	-4,227	15,447	180
April	-11,273	7,895	-3,590
May	-6,300	13,690	-240
June	1,049	1,938	7,107
July	26,660	18,958	-1,593
August	25,916	13,931	5,576

Takeaways

• Exports scaled back sharply following the implementation of U.S. tariffs on Canadian steel, aluminum, automobiles and goods not compliant with the Canada-United States-Mexico Agreement. Exports contracted 7.5% in the second quarter, the largest decline since 2009, excluding the pandemic period. Real gross domestic product contracted 0.4% after six quarters of growth. 
• After advancing in the first quarter, manufacturing output and wholesaling activity contracted in the second quarter as tariffs weighed on cross-border trade. In April, 54% of manufacturers reported being impacted by tariffs, along with 44% of wholesalers. The share of businesses affected by tariffs edged steadily lower in May and June. Many businesses that engage in cross-border trade are pursuing mitigation strategies to deal with the disruptions from tariffs.
• There has been no net employment growth from February to August 2025. The pace of employment growth in the private sector, measured year over year, eased before the trade conflict and has been below 2% for the past 17 months. Employment growth among public sector employees has slowed considerably in 2025. 
• In 2023 and 2024, rail freight traffic received from U.S. connections represented an average of 12.0% of total rail tonnage each month. During the first half of 2025, freight volumes from U.S. connections accounted for 10.6% of total rail tonnage.
• As buy Canadian sentiment rose in response to the tariffs, domestic travel within Canada rose 2.2% year over year to 67.6 million trips in the first quarter of 2025. Spending on domestic tourism reached $13.8 billion, up 4.4% from the first quarter of 2024. 
• Foreign investors steadily reduced their exposure to Canadian securities from February to May 2025, leading to a divestment of $22.6 billion during the first half of 2025. This divestment in part reflected reduced holdings of Canadian shares by U.S. investors. Meanwhile, Canadian investors steadily increased their exposure to foreign securities from February to June, leading to an outward investment of $63.3 billion during the first half of the year. This was driven by acquisitions of U.S. money market instruments, bonds and shares.