How Trump’s Proposed Tariffs Could Reshape Markets

If there’s one thing we know about Trump, it’s that he doesn’t bluff when it comes to tariffs.

The man negotiates like a high-stakes poker player who already knows the river card!

Now, with his second term locked in, he's making his moves, and the market is reacting…

Trump’s latest policies are a double-edged sword though.

On one side, he's paused tariffs on Canada and Mexico, recognizing the importance of keeping North American supply chains intact; influenced by the 10,000 troops now apparently stationed at the borders.

On the other side, tariffs on China and Europe are ramping up, and that’s where the ripple effect begins.

For Canadian businesses, this is a moment of both relief and uncertainty…

But, lets dive in.

Autos, steel, aluminum, and agriculture got a temporary reprieve, but any shift in global trade could create longer-term disruptions.

U.S. companies that depend on Canadian resources—think auto manufacturers, energy, and construction firms—breathe easier for now.

Retailers like Home Depot (HD) and Lowe’s (LOW), which source Canadian lumber and materials, dodge a bullet, but if tariffs on China drive up costs elsewhere, and consumers will feel it!

Which Industries Will Be Hit the Hardest?

Autos & Auto Parts

Canada, Europe, and China produce a lot of cars.

A lot of cars that enter the states.

Tariffs on European and Chinese auto parts mean that North American manufacturers, like Magna International (MG.TO) and Linamar (LNR.TO), could see increased demand. But it’s a short-lived advantage if material costs rise due to shifting supply chains. On the U.S. side, Ford (F) and General Motors (GM) will have to balance new domestic supply opportunities with higher costs.

This one is big. See here:

The Globe and Mail reports in its Wednesday edition that Ford Motor chief executive officer James Farley says U.S. tariffs on Canadian and Mexican imports will devastate the U.S. automaking industry.

The Globe's Eric Atkins writes that Mr. Farley says Mr. Trump's tariffs are creating "cost and chaos" for Ford, which is a major buyer of steel and aluminum.

He says:

Ford executives have joined a growing chorus of business leaders in North America who warn the tariffs favoured by Mr. Trump would cause inflation and job losses.

AutoForecast Solutions' Joe McCabe believes that potential tariffs on autos and parts will not immediately threaten Canadian auto plants.

However, they will likely steer new automaker investments toward U.S. factories instead of those in Canada or Mexico.

Steel & Aluminum

While Canadian producers like Stelco (STLC.TO) and Alcoa (AA) dodge immediate tariffs, any tightening of global supply could create volatility. American steelmakers like Nucor (NUE) and Cleveland-Cliffs (CLF) are positioned well for now, benefiting from restrictions on foreign competitors.

The Globe and Mail reports that Canada's steel industry is preparing to cushion the blow from American tariffs that may be imposed, including potentially moving up shipments to the United States.

Canada's steel industry is no stranger to facing the wrath of Mr. Trump though.

During his first term, he imposed 25-per-cent tariffs on imports of Canadian steel and kept them in place for nearly a year.

The tariffs imposed in May, 2018, took a heavy toll on the domestic steel industry: Exports to the U.S. quickly fell by 38 per cent.

A year later, the value of Canadian steel exports had fallen to its lowest level in almost a decade.

This time around, steel producers are pro-actively taking measures to minimize the pain.

Companies are moving up shipments into the U.S. in an attempt to book as much revenue as possible ahead of the potential tariffs.

Companies are also looking at pausing new investment, and taking a look at their product mixes to see if something can be adjusted to minimize the possible financial damage.

Agriculture

Canadian farmers, particularly those exporting wheat, canola, and beef, are temporarily spared, but they need to watch for retaliatory actions from China.

Meanwhile, U.S. agriculture faces the threat of foreign market restrictions, with companies like Archer Daniels Midland (NYSE:ADM) and Bunge (NYSE:BG) closely monitoring export shifts.

Morgan Stanley (NYSE:MS) lowered its price targets on ADM and Bunge due to a weaker-than-expected 2025 outlook and earnings pressure.

The firm cut ADM’s price target to $47 from $52, reducing its 2025 EPS estimate to $4.00 from $4.15 amid supply risks and lower valuation multiples.Bunge’s price target was slashed to $74 from $90, with 2025 EPS now expected at $7.75, down from $8.50.

MS noted that both companies face a more backloaded 2025 recovery, with equity markets showing less confidence in a second-half rebound.

Retail & Consumer Goods

Retailers dodged a direct hit, but if Trump escalates tariffs on Chinese imports, companies like Walmart (WMT), Target (TGT), and Best Buy (BBY) will be dealing with higher costs and potential price increases.

She noted that vendors have "very, very small margins in this industry, which means the vast majority of that tariff will probably be passed on to the consumer as a price increase."

Roughly 60% of Best Buy's products come from China, and Mexico is its second-largest supplier, as many companies have moved production of larger items to the country in the last five years. Items produced there include appliances, desktop computers, and large TVs. The business doesn't import anything from Canada.

Which Sectors Will Be Least Affected?

Technology

Tech giants like Shopify (SHOP.TO), Amazon (AMZN), and Microsoft (MSFT) remain relatively insulated, as their supply chains are less tariff-sensitive.

However, semiconductor firms reliant on China, like Nvidia (NVDA) and AMD (AMD), could face disruptions.

Utilities & Energy

Energy companies like Enbridge (ENB.TO) and TC Energy (TRP.TO) will likely see minimal impact, as oil and gas trade continues to operate under its own set of geopolitical rules.

Healthcare

While medical device manufacturers may see some pricing effects, pharmaceuticals and biotech firms are mostly shielded from the tariff fallout. Companies like Eli Lilly (LLY) and Pfizer (PFE) remain strong bets.

Winners & Losers in the Stock Market

Winners

• U.S. Steelmakers: Nucor (NUE) and Cleveland-Cliffs (CLF) should gain from reduced foreign competition.

• Defense Stocks: With Trump’s strong military stance, companies like Lockheed Martin (LMT) and Raytheon (RTX) could see increased government spending.

• North American Manufacturers: Caterpillar (CAT) and Boeing (BA) stand to benefit from domestic production incentives.

Losers

• Canadian Exporters: While tariffs are paused, companies like Magna (MG.TO) and Bombardier (BBD.B.TO) remain vulnerable to future policy changes.

• U.S. Retailers & Consumers: Walmart (WMT), Target (TGT), and Home Depot (HD) will see margin pressures if supply chains tighten further.

• Automakers: Ford (F), GM, and Tesla (TSLA) are in a delicate balancing act with cost pressures and supply chain adjustments.

The Global Ripple Effect: Europe & China

• Europe: With tariffs on European goods rising, expect retaliation. Luxury brands like LVMH and auto manufacturers like Volkswagen (VWAGY) could see turbulence.

• China: Beijing is watching closely. If Trump escalates, China could shift imports to Canada, benefitting Canadian mining and resource companies like Teck Resources (TECK.B.TO).

Trump’s unpredictability is the wild card, but tariffs are rarely permanent.

If negotiations with China and Europe drag into 2026, businesses will have to adjust accordingly.

North American firms will push for more clarity, but as history shows, trade wars tend to last longer than expected.

Final Thoughts: How to Position Your Portfolio

• Short-term: Look for opportunities in U.S. steel and defense stocks.

• Medium-term: Expect volatility in auto and retail stocks, especially those with supply chain exposure.

• Long-term: Canadian companies may diversify trade relationships, leading to growth in non-U.S. markets.

Trade wars are like hurricanes—destructive for some, profitable for others.

The key is to position yourself in the eye, where the calm allows for strategic moves while others scramble.

As always, happy hunting!