The results were better than expected, as economists had forecast a 1 billion dollar deficit in the month - slightly less than the amount posted in February.
The U.S. deficit with Korea - a much-watched figure in light of recent administration criticism of the U.S. -Korea Free Trade Agreement - increased by $600 million, the agencies said in a report.
With uncertainties and unstable factors in foreign trade expected to remain, each region and government department should effectively implement policies to support the development of foreign trade, the commerce ministry report said.
The decrease in the goods and services deficit reflected an increase in the goods deficit of $0.4 billion to $65.5 billion and an increase in the services surplus of $0.4 billion to $21.8 billion.
In March, exports of goods and services fell 0.9 percent to $191.0 billion.
Most of the surge in exports is going to countries other than the United States, which is a sign that Canada's economy is diversifying.
"Combined with a continued creep higher in crude prices, look for energy to continue being a catalyst in supporting Canadian exports", CIBC economist Nick Exarhos wrote in a report.
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Statistics Canada said higher imports of metal and non-metallic mineral products, industrial machinery, equipment and parts, and motor vehicles and parts were the main contributors. Meanwhile, consumer goods exports were down $0.65 billion in March, nearly erasing the $0.69 billion increase recorded in February.
The Trump administration is looking at trade as it seeks to boost annual economic growth to 4 percent.
Meanwhile, imports rose 1.7% to C$47.11 billion, on higher prices.
Excluding energy, exports increased by 3.1%.
In April, the Bank of Canada lowered its export growth forecast to 2.5 percent over the next three months from around 3.0 percent in January due to the additional drag on global investment from uncertainty over US trade policy. For all of a year ago, the gap exceeded $500 billion.
Jimmy Jean, economist at Desjardins Capital Markets, said it was a "pretty strong" report, notwithstanding what appears a temporary gain in coal sales overseas, and should allay concerns after February's lackluster results. "The advance data pointed to a small increase in the deficit". -China trade deficit increased 7.0 percent to $24.6 billion in March.