EXPLAIN HOW THIS ARTICLE RELATES TO THE TOPIC: BARRIERS TO TRADE.

OTTAWA Canada's trade balance shifted back to a deficit in March following two consecutive months of surplusa as imports jumped significantly while exports edged up slightly, Statistics Canada said on Tuesday. Canada's trade deficit with the world was C$1.1 billion in March. Analysts polled by Reuters had predicted a surplus of C$700 million after a revised surplus in February. Importsrose 5.5 per cent to their highest level since May 2019, driven by energy imports, though all 11 sector postedincreases, Statistics Canada said. Exports edged up 0.3 per cent, mostly on motor vehicles and parts, offset

by falling energy exports. Much of the shift in energy imports and exports was due to a rebalancing from February, when power outages in Texas crippled the U.S.oil and gas industry leading to a surge in Canadian energy exports to that country.

"We had some pretty big movements last time around and these are offsetting movements,"said Peter Hall, chief economist at Export Development Canada. Hall noted that the broad gain in imports indicates that Canada's industrial machine is gearing up for a surge of demand from the United States, where a large stimulus package is bolstering consumer spending.

"This is arming ourselves for stronger growth, that's what the import surge seems to be indicating here. The exports will follow, but there is a bit of lag here,"Hall said. AMERICAN MARKET Exports to the United States fell 3.8 per cent in March, while imports rose 5.2 per cent. Canada's trade surplus with the United States, its largest trading partner, narrowed in March to C$4.3 billion. Looking forward, economists expect choppy trade numbers in April as fresh restrictions to curb a harsh third wave of COVID-19 weigh.

"April will likely be pretty volatile given the restrictions, but higher commodity prices should provide ongoing support to Canada's trade balance,"Benjamin Reitzes, Canadian rates and macro strategist at BMO Economics,said in a note.

Canada's economy is expected to expand 6.5 per cent in 2021, after shrinking 5.4 per cent in 2020 amid the coronavirus pandemic, according to Bank of Canada estimates. In other data released Tuesday, the U.S.trade deficit was shown to have jumped to a record high in March amid roaring demand, which is drawing in imports, and the gap could widen further as economic activity rebounds faster than global rivals.

Manufacturers lack the capacity to satisfy the surge in demand because of resource constraints and bottlenecks in the supply chain. Inventories are very lean. Demand is being driven by a rapidly improving public health situation and massive government aid to households and businesses to cushion the blow from the pandemic.

U.S. DEMAND "The widening of the trade gap will likely be a persistent feature of the economy this year as domestic demand outstrips the U.S.economy's productive capacity,"said Conrad DeQuadros, senior economic adviser at Brean Capital in New York.

The trade deficit increased 5.6 per cent to an all-time high of $74.4 billion in March, the Commerce Department said. The trade gap was in line with economists'expectations.

Imports soared 6.3 per cent to a historic $274.5 billion in March. Goods imports shot up 7.0 per cent to $234.4 billion, also an all-time high. Imports of consumer goods were the highest on record, as were those for food and capital goods.

The U.S.imported a range of goods, including apparel, furniture, toys, semiconductors, motor vehicles, petroleum products and telecommunications equipment, but imports of civilian aircraft and cellphones fell.

Demand during the pandemic shifted to goods from services, with Americans cooped up at home. The economic boom is also being boosted by the Federal Reserve's ultra-easy monetary policy stance.

The bulk of imports in March came from China, boosting the politically-sensitive goods trade deficit with Beijing to $27.69 billion from $24.62 billion in February, reversing a tariffs-driven improvement during the Trump administration.

"The widening in the trade balance with China over the last few months has erased the tightening that occurredo over2019 as a result of tariffs,"said Veronica Clark, an economist at Citigroup in New York.