In this week’s EconMinute, we’re talking about Canadian exports and trade.
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Cross border trade has been feeling a major impact from the global microchip shortage. Over the past several weeks, disruptions to the global supply chain have been making headlines, and the news has not been good for many Canadian exports. And while this shortage has impacted the auto industry most of all for now, it will continue to disrupt supply chains in other manufacturing industries soon.
- Canadian international trade dropped considerably in April, driven by a decline in the number of cars and car parts shipped across the border.
- Motor vehicle & parts exports declined by 18% (or $1 billion) from March to April. With the exception of the early-pandemic collapse, this is the lowest level seen since January of 2014, but the reason has little to do with consumer demand. This collapse traces back to the widely reported global semiconductor chip shortage, which has affected not just North American supply chains, but supply chains across the globe. As an important input in vehicles, the auto industry has been forced to cut back production as a result.
- This global chip shortage is not just a problem in the auto industry: it is likely to continue into 2022 and ripple across other manufacturing industries. This is because chips are an important input to many products including computers, dryers, and even toothbrushes.
- Energy exports were also slightly down in April from a very high March watermark, and still remain at a level higher than any other month in the past year.