Investing.com -- Canada’s merchandise trade surplus narrowed sharply in July as exports fell for the first time in six months while imports rose, signalling renewed pressure on trade as the country faces heightened tariff uncertainty with the United States.

The trade surplus shrank to C$769 million in July from C$3.9 billion in June, Statistics Canada said on Thursday. Economists had expected a surplus of about C$3.2 billion, according to market estimates.

The July surplus marked Canada’s fifth consecutive monthly trade surplus, but the sharp drop reflected a 2.3% decline in exports, which followed five straight monthly increases. Imports rose 2.2% during the month.

The figures come as Canada’s trade relationship with the United States faces another test following Washington’s imposition of new 50% tariffs on some Canadian goods last month. The weaker July export performance could add to concerns about the impact of trade restrictions on Canada’s economy in the months ahead.

The weakness was concentrated in energy products and metals. Energy exports fell 4.4%, their third consecutive monthly decline, while crude oil exports dropped 5.5% as both prices and volumes decreased.

Exports of metal and non-metallic mineral products fell 8.5% in July, reversing part of the 15.8% increase recorded in June. Excluding energy and metals, however, exports increased 0.6%, while exports of aircraft and other transportation equipment and parts surged 34.9%.

Total exports fell to C$76.14 billion from C$77.96 billion in June, while imports increased to C$75.37 billion from C$73.76 billion. The rise in imports was led by an 11.4% increase in motor vehicles and parts, mainly from the United States.

Trade with the United States weakened further. Canada’s surplus with its largest trading partner fell more than 40% to C$5.9 billion, as exports to the U.S. declined 6.6% and imports rose 1.8%.

The United States accounted for 66.35% of Canada’s exports in July, down from 69.39% in June and 72.64% a year earlier, highlighting a gradual reduction in Canada’s reliance on the U.S. market.

Canada’s trade with countries outside the United States provided some offset. Exports to those markets rose 7.4%, while imports increased 2.8%, narrowing Canada’s non-U.S. trade deficit to C$5.1 billion from C$6.1 billion in June.