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The wider than expected trade deficit in February was the widest since the USD60.2 billion trade deficit recorded in October of 2008.

The gap increased 1.6 per cent in February to US$57.6 billion, compared with the median estimate of economists for US$56.8 billion, Commerce Department data showed on Thursday. While exports increased overall, the figure was offset by the largest decline on record for farm, fishing and intermediate food products, which were down by 17.2 per cent to $2.4 billion during the month.

Exports grew by 0.4 per cent as shipments of passenger cars and light trucks rebounded following the auto plant closures in January. There were also increases in exports of capital goods such as civilian aircraft and drilling and oilfield equipment.

Exports of wheat and canola both plunged by 40 per cent during the month. The Institute for Supply Management said earlier this week that the tariff announcement helped send a measure of raw-material prices paid to an nearly seven-year high in March, as businesses began stocking up.

At 9:43 a.m. EDT (1343 GMT), the Canadian dollar was trading almost unchanged at $1.2772 to the greenback, or 78.30 US cents.

Imports rose by 1.9 percent on a 15.4 percent surge in shipments of energy products, pushed up by higher demand for crude oil and crude bitumen.

The Canadian dollar was little changed on the news.

The February increase in the goods and services deficit reflected an increase in the goods deficit of $0.3 billion to $77.0 billion and a decrease in the services surplus of $0.6 billion to $19.4 billion.

Paul Ferley, assistant chief economist at Royal Bank of Canada, said the stronger imports showed some strength in the domestic economy. At the same time, his tariffs on some imported steel and aluminum, along with proposed taxes by the United States and China on goods from each country, represent a wild card for the outlook and have sparked financial-market swings in recent weeks. As a result, the trade surplus with the United States shrank to C$2.58 billion from C$2.93 billion in January.