Tariff Impact on Canadian Stocks
Donald Trump’s tariff policies have long affected Canadian companies that rely heavily on exports to the United States. Recent developments, including new proposals by Mexico and additional tariffs on Chinese goods, add another layer of complexity to an already volatile trade environment.
USA Treasury Secretary Scott Bessent recently highlighted Mexico’s proposal to match U.S. tariffs on China and urged Canada to follow suit to create a “Fortress North America” against Chinese imports. With Mexican officials willing to raise tariffs on Chinese goods and increase U.S. imports, the trade landscape is shifting quickly.
Below is an updated look at the key sectors and Canadian stocks most affected by these developments.
1. Automotive Sector:
The automotive industry is one of Canada’s largest export sectors, with significant production destined for the U.S. Tariffs on cars, parts, or related materials could disrupt supply chains further.
With Mexico’s proposed tariffs likely to target finished vehicles and auto parts, the pressure on cross-border trade will intensify.
Affected Stocks:
- Magna International Inc (MG:CA):
As one of the largest auto parts manufacturers in North America, Magna relies heavily on exports to U.S. automakers. Tariffs on auto parts or finished vehicles could increase costs and decrease demand. - Linamar Corporation (LNR:CA):
Another leading auto parts manufacturer, Linamar would face higher production costs or reduced U.S. demand if tariffs are imposed on key inputs like steel or aluminum. - Martinrea International Inc (MRE: CA):
Martinrea’s reliance on cross-border supply chains makes it vulnerable to increased costs from tariffs on metals or automotive products.
2. Metals and Mining
Trump’s previous tariffs on steel and aluminum already strained the Canadian metals sector. Renewed or expanded tariffs, combined with the ongoing U.S. and Mexican pressure on Chinese goods, could create further challenges for mining and processing companies.
Affected Stocks:
- Stelco Holdings Inc. (STLC:CA):
Stelco produces steel products that are exported to the U.S. for construction and automotive applications, making it directly vulnerable to steel tariffs. - Rio Tinto (RIO) (via its Canadian operations):
A leading aluminum producer with significant operations in Canada, Rio Tinto would be affected by tariffs on aluminum exports to the U.S. - Teck Resources Ltd (TECK-B:CA):
As a diversified mining company, Teck could be indirectly impacted by tariffs on materials like coal and zinc used in steel production.
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3. Energy and Pipelines
Though energy is not directly targeted by tariffs, Trump’s broader trade and energy policies can hurt Canadian oil and gas companies that rely on U.S. markets.
The potential for trade restrictions, alongside Mexico’s proposal, adds to the uncertainty for cross-border energy flows.
Affected Stocks:
- Enbridge Inc (ENB:CA):
Enbridge’s pipeline infrastructure carries Canadian oil and gas to U.S. markets. Tariffs on energy-related goods or restrictions on imports could reduce volumes. - Canadian Natural Resources Ltd (CNQ:CA) and Suncor Energy Inc (SU:CA):
These oil producers export a significant amount of crude oil to the U.S. via Enbridge and other pipelines, making them vulnerable to protectionist energy policies.
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4. Forestry and Paper
The U.S. has a long-standing dispute over Canadian softwood lumber tariffs. New trade developments, including pressures from Mexico and changes in U.S. trade policy, could exacerbate this contentious issue, further impacting profitability for lumber exporters.
Affected Stocks:
- West Fraser Timber Co Ltd (WFG:CA):
West Fraser is a leading producer of lumber and wood products, which are heavily exported to the U.S. Tariffs could hurt profit margins. - Canfor Corporation (CFP:CA):
Another significant lumber exporter, Canfor would face higher costs and lower demand if tariffs are applied to softwood lumber.
5. Agriculture and Food
Canadian agricultural products such as dairy, pork, and grains have historically been subject to U.S. trade scrutiny. Tariffs or quotas could harm farmers and food producers.
Affected Stocks:
- Saputo Inc (SAP:CA):
As a dairy giant, Saputo could be impacted if U.S. tariffs target Canadian agricultural exports or if quotas are introduced. - Maple Leaf Foods Inc (MFI:CA):
Maple Leaf exports pork and other products to the U.S. and could face challenges if agricultural tariffs are implemented.
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6. Industrial and Construction Materials
Companies in this sector rely on cross-border trade for raw materials and finished goods, making them susceptible to increased costs from tariffs.
Affected Stocks:
- WSP Global Inc (WSP:CA):
A provider of engineering and construction services, WSP could face project delays or higher costs if tariffs disrupt the supply of raw materials. - SNC-Lavalin Group Inc (SNC:CA):
A major player in infrastructure projects, SNC-Lavalin would be indirectly affected by tariffs that raise costs for construction materials.
Impact & Outlook:
The evolving trade policies, with the U.S. imposing additional tariffs on Chinese goods and Mexico proposing countermeasures, have broadened the uncertainty in cross-border trade.
Canadian companies, especially those in automotive, metals, energy, forestry, agriculture, and industrial materials, face increased exposure as global supply chains adapt.
With the looming threat of further tariffs on March 4 and ongoing discussions between Mexico, the U.S., and Canada, market participants should closely monitor trade negotiations.
These developments could fundamentally reshape the economic landscape, affecting stock valuations and long-term industry performance.
STA Research (StockTargetAdvisor.com) is a independent Investment Research company that specializes in stock forecasting and analysis with integrated AI, based on our platform stocktargetadvisor.com, EST 2007.
