Canada's trade surplus dropped significantly in July, falling by 82% compared to the previous month, according to a report released by the country's statistics institute on Thursday. In June, the trade surplus had reached a record high of 4.2 billion Canadian dollars (2.62 billion euros), but it fell to 769 million Canadian dollars (480 million euros) in July. This decline was driven by a 2.3% decrease in exports and a 2.2% rise in imports. A major factor behind the drop in exports was the falling prices of oil and precious metals, which are key components of Canada's export economy. Exports to the United States, Canada's largest trading partner, fell by 6.6% in July. This decline was largely due to lower crude oil prices, as the U.S. is a major importer of Canadian oil. The trade surplus with the U.S. also dropped sharply, nearly halving from 10.3 billion Canadian dollars in June to 5.9 billion in July. Analysts expect this trend to continue, especially as tensions between Canada and the U.S. over trade practices have escalated in recent weeks. The decline in the trade surplus comes amid growing trade tensions between the two nations. Canadian Prime Minister Mark Carney recently ended trade negotiations with the U.S., accusing the Trump administration of seeking an "unfair" trade deal. In response to new U.S. tariffs imposed on August 22, Canada announced retaliatory measures that will take effect on September 8. These actions are expected to further strain the trade relationship and impact Canada's economic performance. Economists from RBC noted that the recent trade data suggest the trade balance will not contribute as strongly to Canada's economic growth as it did in the second quarter, which saw a robust GDP growth of 3.3% annualized. They also warned that the U.S. tariffs implemented in August could further reduce American demand for Canadian goods, potentially worsening the trade deficit in the months ahead.