OTTAWA, Ont. — Stalled automotive trade with the U.S. was the main reason behind a 4% drop in merchandise exports to the U.S. in January, Statistics Canada reports.

Exports dropped to $26 billion. Imports also declined to 4.2% to $18.7 billion.

Automotive exports, showing much volatility throughout the second half of 2003, have declined more than 10% in three of the last four months, as manufacturing plants and dealerships faced consumer uncertainty in the market.

January’s widespread weakness was led by an 11.4% drop in passenger cars, Canada’s largest automotive category. Trucks and motor vehicle parts declines were less severe, but more than offset December’s growth.

Machinery and equipment exporters sold $394 million less than in December (-5.5%), the result of weak exports of industrial machinery and a variety of other equipment and tools. Strong aircraft exports offset some of these declines.

Combined, exports of automotive products and machinery and equipment account for over 40% of all Canadian merchandise exports.