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Canada’s trade deficit widened in August, Statistics Canada said on Tuesday, with the country facing a decline in exports amid the imposition of punishing tariffs by Washington.

With exports down three per cent during the month — the first decline since April — and imports rising 0.9 per cent, the trade deficit stood at $6.3 billion in August, compared with $3.8 billion in July.

The trade deficit in August was due to a decline in overall exports, not only to Canada’s main trading partner the United States but also to the rest of the world.

Canada’s international trade has been disrupted since the beginning of the year with the imposition of targeted tariffs by U.S. President Donald Trump.

Washington is imposing tariffs on Canadian lumber, aluminum, steel, and automotive sectors, among others.

Unlike some other countries, Canada has not yet concluded a comprehensive trade agreement with the United States, its main economic partner. Many of its exports to the United States, however, are exempt from tariffs based on an existing trade agreement that covers the United States, Canada and Mexico.

On Monday, President Trump added imported heavy trucks to the new tariff list, which will face a 25 per cent levy starting Nov. 1.

The decline in exports is largely attributable to lower exports of raw gold to the United States, Statistics Canada said in a statement.

“Canada’s export-gaining streak reversed course in August, wiping out most of the progress we’ve seen since April,” TD economist Marc Ercolao said in a research note.

“There is still considerable uncertainty on the trade front in the near-term but we believe that the peak negative impacts from tariffs are in the rearview mirror.”

CIBC economist Katherine Judge said the August data suggested that “the tariff shock is still limiting activity, and net trade won’t be as big of a positive for Q3 GDP as we previously expected.”

Several economists expect the renegotiation of the CUSMA — the free trade agreement between the United States, Canada, and Mexico — to dominate the trade agenda next year.

Discussions between the three countries on this issue are set to begin in the coming months.

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