Question Period Note: 2023 Annual merchandise trade update

Global Affairs Canada's 2023 annual merchandise trade report was published on April 30. It analyzes Canada's trade performance at a detailed product and country level.

• While global merchandise trade volumes declined 1.7% in 2023, Canada's export volumes managed to expand 5.7%. This marked the highest level in Canada's export volumes since the pandemic.
• Declining commodity prices affected Canada's merchandise trade values; 2.2% decrease in exports, and import growth moderating to 1.4%. Natural resource exports saw the largest declines, but we saw increases in automotive exports (+31%) and aircraft and other transport (+28.2%).
• While merchandise exports to the U.S. fell by 1.2%, imports rose 2.1% in 2023. Lower exports to the U.S. stemmed from declines in resource sectors and were partially offset by increased exports of motor vehicles and aircraft.
• Merchandise exports and imports to the Indo-Pacific region fell in 2023, declining by 4.5% and 5.2% respectively. Despite total merchandise trade with Indo-Pacific falling, Canadian merchandise trade with the region has grown faster than to other regions in the last 20+ years.
• Canadian exports and imports are generally diverse across sectors, with no single sector dominating. Exports to the U.S. were more concentrated than exports to the world in 2023 as a whole, with energy and motor vehicles representing dominant sectors.

In 2023, the global trade landscape faced significant hurdles, including high levels of protectionism, maritime disruptions in critical areas like the Panama Canal and Red Sea, escalating geopolitical tensions, and inflation and monetary tightening across the world. These challenges led to a noticeable dip in global trade volumes. However, Canada managed to buck this trend, with merchandise export volumes growing 5.7% thanks to strength in the export volumes of motor vehicles and aircrafts.

Export prices-weighed down by commodity prices-declined significantly. As a result, Canada's merchandise export values contracted by 2.2% despite growing in volume terms. Import values grew by 1.4% in 2023.

Canada's merchandise exports to the United States declined 1.2% in terms of value, particularly in resource-based sectors, with energy products dropping by 18.7% and forestry products by 16.8%. However, this was partially offset by a 32.8% increase in exports of motor vehicles and parts and 43.9% growth in aircraft and other transportation equipment. Imports from the U.S. increased, notably in motor vehicles and parts which grew 9.6%, and electronic and electrical equipment, up 12.6%.

Exports to the Indo-Pacific region also declined, with significant drops in exports to Japan (-12.4%) and South Korea (-19.9%). However, exports to China increased 6.3%, supported by growth in agricultural products like canola seeds. At the same time, imports from China fell 10.9% due to lower imports of consumer goods and electronics, while imports from Japan (+20.9%), South Korea (+4.1%) and Australia (+22.0%) grew.

In Europe & Central Asia, exports fell with a notable drop to the United Kingdom (-25.0%) due to lower exports of metal and non-metallic mineral products (gold). Conversely, imports from this region increased, with Germany (+11.2%) and Italy (+6.3%) being notable sources of growth. Import growth from this region was driven by a 18.2% boost in industrial machinery and a 20.6% growth in motor vehicles and parts.

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