Canada's merchandise trade deficit increased to $6.32 billion in August, according to official statistics released on Tuesday. This marks a significant rise from a deficit of $3.82 billion in July. The widening deficit was primarily driven by a sharper decline in exports compared to the modest increase in imports.

Total exports fell by 3 percent to $60.6 billion in August. Exports to the United States, Canada's largest trading partner, decreased by 3.4 percent, totaling $44.18 billion. The decline was largely attributed to a drop in unwrought gold exports, along with reductions in shipments of lumber, machinery, and equipment.

Imports, on the other hand, rose by 0.9 percent to $66.9 billion. This increase was supported by higher imports of metal and non-metallic mineral products, including significant amounts of unwrought gold. Excluding these products, total imports actually fell by 1 percent.

The trade deficit with the U.S. shrank to $6.43 billion in August from $7.42 billion in July, as imports from the U.S. decreased by 1.4 percent. Meanwhile, exports to countries other than the U.S. also fell, down 2 percent for the third consecutive month. This decline was mainly due to lower exports of crude oil and nuclear fuel.

The data reflects ongoing challenges in Canada's international trade landscape, particularly following the imposition of sectoral tariffs by the U.S. earlier this year. These tariffs have forced Canadian businesses to adjust their supply chains, leading to volatility in trade figures.

Prime Minister Mark Carney is scheduled to meet with U.S. President Donald Trump to discuss the impact of these tariffs on critical sectors such as steel, cars, and lumber. However, experts caution that a significant trade agreement is unlikely.

Overall, the trade deficit with countries other than the U.S. reached a record high of $12.8 billion in August, up from $11.2 billion in July, indicating a growing imbalance in Canada's trade relations globally. Statistics Canada noted that in volume terms, total exports fell by 2.8 percent, while total imports decreased by 0.3 percent in August.