The threat of a trade war between the United States and Canada has been intensifying recently. U.S. President Donald Trump has threatened to impose a 25% tariff on Canadian imports and, on Monday, signed new executive orders introducing even harsher tariffs on steel and aluminum. These tariff policies pose significant risks not only to the Canadian economy but also to the Canadian stock market.
Since Trump was elected president on November 5 last year, the stock prices of many trade-sensitive companies in Canada have sharply declined. For example, Canadian aircraft manufacturer Bombardier Inc. saw its stock drop by approximately 19%. Other sectors, including auto parts, steel, lumber, and dairy, have also experienced declines. In contrast, sectors that account for two-thirds of the S&P/TSX Composite Index—such as financials, telecommunications, real estate, energy, and materials—are expected either to avoid direct tariff impacts or to benefit from possible exemptions.
Investor sentiment has been mixed. Amid tariff threats, gold and mining companies dealing in irreplaceable materials, such as uranium, have become havens for investors, serving as ideal protective assets.
In 2024, Aero Energy Ltd. (TSXV: AERO, OTC Pink: AAUGF), a mineral exploration and development company, had Interim CEO and Chairman Galen McNamara provide a detailed update on the results of drilling activities and the new discovery at the Murmac Uranium Project during an interview on METALS 100. The company owns a 250,000-acre land package in the historic Uranium City district within Saskatchewan’s Athabasca Basin. It recently completed its summer drilling program at the Sun Dog Uranium Project near Uranium City in northwestern Saskatchewan.
Driven by increased demand for safe-haven assets, gold has made a significant comeback, with its price soaring to an all-time high. The materials sector in Canada’s Toronto stock market, which includes metal mining companies, has risen nearly 15% this year. Notably, shares of Agnico Eagle Mines Ltd. have surged by 26.5%.
Furthermore, despite the widespread pain tariffs could inflict on all parties, it’s possible that Trump’s tariff threats are a negotiation tactic. If that’s the case, industries likely to receive exemptions are those considered irreplaceable and heavily relied upon by the U.S., such as Canadian oil, critical minerals, and uranium. Shares of Canadian uranium giant Cameco Corp., for example, pulled back after hitting a peak last December but have still risen about 46% since September.
Finally, trade uncertainty has also affected the Canadian dollar. Last week, the currency hit a 22-year low of 1 CAD to 0.6760 USD. However, many of Canada’s oil, gas, and materials companies generate revenue in U.S. dollars while incurring costs in Canadian dollars, creating a natural currency advantage for them due to the weaker loonie.
