Canada’s trade surplus significantly increased in August to $4.2 billion, driven by a surge in exports to the U.S. ahead of President Donald Trump’s new tariffs. Analysts had predicted a smaller surplus of $1.55 billion. Canadian exports to the U.S. rose by 8.1% in August, while imports from the U.S. dropped by 2.5%, leading to a trade surplus of $11.2 billion between the two countries, the highest in 19 months.

Trump’s tariffs affecting around $20 billion of Canadian exports went into effect on Aug. 22. Economists anticipate a more precise impact in September, reflecting the tariffs on various products like wine, furniture, dairy, cement, clothing, fishing gear, and hockey equipment.

Overall Canadian exports rose by 2.5% in August to $77.91 billion, rebounding from a 2.6% decline the previous month. Energy products, including refined petroleum and crude oil, saw a notable 4.7% increase to $19.03 billion. Excluding energy products, exports rose by 1.8%. Consumer goods, machinery, and electronic equipment exports showed significant gains in August.

Imports decreased by 2% to $73.71 billion in August, with motor vehicles and parts seeing the largest decline. Canada has been diversifying its trade partners to reduce its reliance on the U.S. market, with exports to other countries increasing. However, in August, exports to non-U.S. destinations fell by 8.5%, widening the trade deficit to $7 billion.

Following the release of trade data, the Canadian dollar strengthened slightly, trading at $1.4250 against the U.S. dollar, or 70.18 U.S. cents.