Canada’s share of exports destined for the US shrank to the smallest proportion since at least 1997, excluding the Covid pandemic. Shipments to other countries reached a new high, led by gold exports.

With US tariffs crushing exports and imports between Canada and its biggest trading partner, exports to other countries helped narrow the nation’s trade deficit to C$5.9-billion ($4.3-billion) in May, from a record C$7.6-billion in April, according to Statistics Canada data Thursday.

May’s smaller trade gap was in line with the median projection in a Bloomberg survey of economists.

Canada’s share of exports destined for the US shrank to 68.3% in May, from last year’s monthly average of 75.9%.

“Canada-US trade is stuck in a lull and it is unlikely to improve for a while. Activity in both directions has slowed, and the drop in imports, especially for integrated trade like energy and manufacturing, is a warning sign that exports could be impacted in the coming months,” Andrew DiCapua, principal economist at the Canadian Chamber of Commerce, said in an email.

Exports to the US were down 0.9%, a fourth straight monthly decline, and imports from the US also fell 1.2%, a third straight monthly drop. As a result, Canada’s goods trade surplus with the US widened slightly to C$3.2-billion in May, from C$3.1-billion in April.

Exports to countries other than the US, however, surged to a record high, led by higher shipments of gold to the UK, crude oil to Singapore and unwrought aluminium and pharmaceutical products to Italy. Canada’s trade deficit with countries excluding the US narrowed to C$9.1-billion in May, from C$10.7-billion in April.

Alexandra Brown, economist at Capital Economics, called the increased shipments to non-US destinations “a small consolation,” saying in a report to investors that “the outlook for exports continues to be weak.”

Total exports rose 1.1% in May, the first increase since January, led by higher gold shipments. However, excluding metal and non-metallic mineral products, exports were down 1.2%. Exports of consumer goods rose 2.6% due to higher pork exports to Japan. A 5.6% decrease in energy exports partially offset some of the gains.

Total imports were down 1.6% in May, the third consecutive monthly decline, led by lower inbound shipments of unwrought gold, which saw a strong increase in April when imports from US surged. Imports of cars and parts fell 5.3%, with passenger cars and light trucks dropping 9.7% to the lowest level in more than two years.