What are retaliatory tariffs and why did Canada remove them?

Retaliatory tariffs are taxes imposed on imports in response to another country's trade actions. Canada had placed 25% tariffs on $21 billion worth of US goods including alcohol, clothing, and shoes. Their removal signals a commitment to normalising trade relations and reducing economic tensions between the two countries.

How does trade normalisation benefit Canadian companies?

When trade barriers are reduced, it creates a more stable and predictable business environment. Canadian companies that facilitate cross-border commerce - like railways, banks, and energy infrastructure - often see increased activity and revenue as trade volumes grow between the countries.

What does 'cyclical investment approach' mean?

A cyclical investment approach focuses on companies whose performance tends to follow economic cycles. In this case, it means investing in Canadian companies that are likely to benefit when North American trade relations improve and economic activity increases.

What is the USMCA trade agreement?

The USMCA (United States-Mexico-Canada Agreement) is the trade deal that replaced NAFTA. It governs trade relationships between the three North American countries and provides the framework for resolving trade disputes through negotiation rather than tariffs.

Why focus on transportation and energy companies?

Transportation companies like railways move goods between countries, whilst energy companies supply the power and fuel needed for increased economic activity. Both sectors typically see higher demand when cross-border trade increases, making them well-positioned to benefit from normalised trade relations.

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North American Trade Normalization

Canada has lifted retaliatory tariffs on a wide range of U.S. products, a significant step toward normalizing trade relations. This creates a favorable investment landscape for American companies in sectors like apparel and consumer goods that export to Canada.

Han Tan | Market Analyst

Updated today | Published at August 24