Canada’s trade balance hit a new record low in Q2 2025, with the current account deficit ballooning by nearly $20 billion to reach an alarming $21.16 billion. This surge is primarily driven by collapsing exports and investor withdrawals as Canada grapples with escalating trade tensions with the US. Exports of goods plummeted by 13.1% in Q2, driven by a sharp decline in shipments to the United States, Canada’s largest trading partner. The impact has been significant, causing GDP to shrink by 1.6% on an annualized basis, exceeding economists’ expectations and contributing to two consecutive quarters of economic contraction – officially defining Canada as technically in a recession.