What are tariffs and how do they affect Canadian stocks?

Tariffs are taxes imposed on imported goods. When the U.S. places tariffs on Canadian exports, it makes Canadian products more expensive for American buyers, reducing demand and hurting Canadian export-dependent companies. However, companies focused on Canada's domestic market are largely unaffected by these trade disputes.

What does GDP contraction mean for investors?

GDP contraction means the economy is shrinking rather than growing. When Canada's GDP contracts due to reduced exports, it often leads to economic uncertainty. However, this can create opportunities for domestic-focused companies that may benefit from potential government stimulus or interest rate cuts designed to boost the economy.

Why might the Bank of Canada lower interest rates?

Central banks typically lower interest rates to stimulate economic growth during downturns. Lower rates make borrowing cheaper for businesses and consumers, encouraging spending and investment. This monetary policy tool can particularly benefit domestic companies as it boosts local economic activity.

What makes a company 'domestic-focused'?

A domestic-focused company generates most of its revenue from within its home country rather than from exports. These businesses serve local customers and markets, making them less vulnerable to international trade disputes, currency fluctuations, and global economic volatility.

What sectors are considered foundational to Canada's domestic economy?

Foundational domestic sectors include banking (financing daily life and business), telecommunications (connecting people and businesses), energy (powering the country), and transportation (moving goods and people within Canada). These sectors form the backbone of Canada's internal economy and are essential regardless of global trade conditions.

15 handpicked stocks

Canada Domestic Champions Explained | Trade War Shield

Recent U.S. tariffs have caused a contraction in Canada's export-driven economy, creating a unique investment opportunity. This theme focuses on Canadian companies that serve the domestic market and are insulated from international trade disputes.

Han Tan | Market Analyst

Updated 2 days ago | Published at August 30