Yesterday, the Bank of Canada reduced the policy rate again by 0.25 percentage points as Canada is in the midst of a tariff war with its largest trading partner.

Today’s Twenty-Four takes a quick look at Alberta’s export performance in January.

New Statistics Canada data released last week show that international merchandise exports out of Alberta rose 14% year-over-year (y/y) in January to reach the highest level since August 2022. Part of the increase is likely attributable to U.S. importers increasing purchases ahead of tariff announcements in order to avoid additional costs. U.S. imports surged in January, widening the country’s trade deficit.

Energy products (+14% y/y), the largest sub-sector, was responsible for the majority (76%) of the aggregate increase. This is not surprising given that Alberta’s oil production in January averaged 4.2 million barrels per day (up 10% y/y), bolstered by the extra pipeline transportation capacity provided by the Trans Mountain Expansion (TMX) in service since May last year. Higher export prices for crude oil and natural gas also played a role.

Although the U.S. remains the top driver of energy exports, we continue to find evidence that more of Alberta’s energy products are making their way to Asian markets. Energy exports to China rose over 500% y/y in January. Last year, Alberta’s energy shipments to Asia jumped nearly fourfold as TMX came on line.

Led by agri-food and wood products, exports of non-energy goods (+15% y/y) also started the year strong with gains in almost all major sub-categories.

It is important to remember this is the export performance prior to the various U.S. tariffs announced in February, and the January results appear to be propped up by temporary stockpiling effects.

In addition, China recently announced new tariffs on Canadian canola, peas, pork and seafood which could very well alter the course of agri-food export revenues in the coming months.

With trade headwinds, we expect a marked slowdown in export volumes this year. Commodity prices have started to weaken and export demand could take a hit from slowing global economic conditions and the ongoing trade war. Having said that, energy export volumes are expected to increase amid rising oil production and the start-up of LNG Canada phase 1 this year. Longer term, companies like Trans Mountain are exploring options to boost pipeline capacity.

Answer to the previous trivia question: The atomic number of aluminum on the periodic table of elements is 13.

Today’s trivia question: Which province exported the most refined petroleum products (e.g. gasoline) to the U.S. last year?