By Promit Mukherjee
OTTAWA (Reuters) -Canada's trade surplus in January exceeded expectations by a wide margin to post a 32-month record as fears of tariffs from the U.S. pushed exports of cars and energy products, especially south of its border, data showed on Thursday.
Canada posted a trade surplus of C$3.97 billion ($2.76 billion), more than double the upwardly revised C$1.69 billion seen in December, Statistics Canada said. This was a second consecutive month when exports far exceeded imports although both grew by a healthy margin.
U.S. President Donald Trump has slapped a 25% tariff on almost all Canadian exports to the country and after a retaliation by Prime Minister Justin Trudeau, he has threatened to stack up more tariffs on them.
On Wednesday, Trump agreed to exempt automakers from the tariffs for one month as long as they comply with the terms of the Canada-U.S.- Mexico free trade agreement, and agreed to look at other products too for similar relief.
Analysts polled by Reuters had forecast Canada's trade surplus to be at C$1.28 billion and have said that trade balances would benefit from companies front-loading orders in January.
The tariff threats are "an incentive for importers to increase their shipments prior to implementation to avoid additional costs," Statscan said, adding that this trend led to a jump in exports and imports.
Total exports increased 5.5% in January to a record of C$74.5 billion, following a 6% increase in December. A 1% decline in the value of the Canadian dollar to its U.S. counterpart in January also led to an increase in export value, it said.
In volume terms, total exports rose 4.5% in January, following an increase of 2.6% in December.
The jump in exports was led by an over 12% jump in motor vehicles and parts, followed by a 4.8% increase in exports of energy products, data showed.
The Canadian dollar was largely stable after the data with the local currency trading weaker by 0.18% to 1.4361 to the U.S. dollar, or 69.63 U.S. cents. Yields on the two-year government bond dropped by 1.1 basis points to 2.544%.
Canada's trade surplus with the U.S. clocked a record of C$14.4 billion in January, from C$12.3 billion in December. This was led by historically high exports of C$58.2 billion to the U.S. Imports from the United States increased 4.7%, Statscan said.
Trump has often indicated that he is unhappy that his country imports more from Canada than it exports and analysts and economists have said that part of the reason for Trump imposing tariffs is driven by the need to reduce the deficit.