Stock Market Turmoil Gives Insight Into Tariff Winners and Losers

How Are Stock Markets Doing?

Canadian stock market volatility has soared over the last number of weeks amid concerns about President Trump’s on-again off-again tariffs. President Trump threatened 25% tariffs on Canadian goods in February but put them on hold until early March, then changed his mind and announced a reprieve until April 2.

Since late January, the TSX has given up more than 1100 points, or more than 5% of its value. Further out, the TSX is down 1.1% year-to-date but is still up 12.5% on an annual basis.

Trump’s tariff threats have had a similar reaction in the U.S. It doesn’t help that President Trump also said recently that a tariff-related recession isn’t out of the cards either.

There is reason to think the world’s biggest economy could actually slip into a recession. U.S. layoffs are increasing, hiring is slowing, consumer confidence is weak, and inflation is picking up.

That kind of recessionary talk has hit American stocks harder than Canadian stocks. The S&P 500 is down 4.1% year-to-date and has lost all of the ground it made since the November U.S. elections. The tech-heavy NASDAQ has fallen to its lowest level since September 2024 while the Dow Jones Industrial Average is trading at its lowest level since early January and has erased all of its gains since the November election.

How Will Canadian Stocks Do in a Trade War?

President Trump’s wavering position on tariffs and a full-on trade war is causing havoc. But sowing chaos is part of President Trump’s leadership style, both in the boardroom and in the White House.

Unfortunately, big businesses, both here and in the U.S., don’t like uncertainty, and neither do stocks. That said, Canadian investors did get an early look at how stocks could perform in a trade war.

At the start of February, President Trump signed an executive order imposing a 25% tariff against Canadian goods beginning February 4. Stocks tumbled on February 3 on the news. That same day, President Trump agreed to take a 30-day pause on his tariff threat.

Before he made that announcement though fears of tariffs and a full-blown trade war resulted in some short-term winners and losers.

Some of those stocks experiencing the biggest decline that day were companies that relied heavily on cross-border trade, including oil and gas companies, industrial equipment dealers, mining and metals companies, auto part manufacturers, and transport and logistics companies.

Which TSX stock performed well? Financial stocks shrugged off fears of tariffs. So too did telecommunication stocks. Some TSX-listed real estate investment trusts, or REITs did as well. Should President Trump’s tariffs result in a prolonged trade war, other Canadian stocks should do well too. For example, a weak Canadian dollar would also benefit tourism and other sectors.

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