Market impact: How Canadians are bracing for the impact of Trump’s trade war

Severity: medium Alert worthy: false

Summary

Canadians are preparing for the potential economic impact of a future US trade war, anticipating new tariffs that could raise consumer prices despite a strong 'buy-local' movement.

Impacts

• FX (CAD): bearish (confidence 0.85) — Anticipation of a trade war and potential new tariffs on Canadian exports to the US would likely weaken the Canadian dollar due to reduced trade flows, diminished investor confidence, and economic uncertainty.
• equity beta (TSX): bearish (confidence 0.8) — Canadian companies, particularly those in export-oriented sectors, would face headwinds from trade disruptions and increased costs, negatively impacting corporate earnings and overall equity market performance.
• freight (shipping rates): bearish (confidence 0.7) — New tariffs and trade barriers between the US and Canada would likely reduce cross-border movement of goods, leading to decreased demand for trucking, rail, and other freight services.
• metals (aluminum, steel): bearish (confidence 0.65) — As a major exporter of various metals (e.g., aluminum, steel), Canada's metal industries would be vulnerable to specific tariffs, potentially disrupting supply chains and impacting prices for Canadian producers.
• grains (ZW (wheat), canola futures): bearish (confidence 0.6) — Canada is a significant exporter of agricultural products. Potential tariffs on grains and other farm products could disrupt trade flows, reduce demand for Canadian exports, and pressure prices.

Caveats

None.