International investors grew increasingly concerned about the Canadian stock market. iShares MSCI Canada ETF (EWC) found support at the 50-day moving average last Friday, Dec. 13. The Canadian dollar (FXC) also fell to a multi-year low.
Markets are bracing for Trump tariffs of 25% in 2025. How might Canada counter them? It is considering the use of export taxes on commodity exports. Investors need to assess the probability of the tit-for-tat response.
Globally, the stock markets are fearful that the performance of companies in basic materials will worsen. Iron-ore producer Cleveland-Cliffs (CLF) continued its downtrend, as did copper producer Freeport-McMoRan (FCX). Teck Resources (TECK) is a high-risk holding, too. Its P/E is around 70 times, so the Canadian miner may fall further despite Canada’s countermoves.
Commodity export taxes would hurt TECK stock. In addition, investors already dumped shares of Waste Connection (WCN), Canadian National Railway (CNI), and Canadian Natural Resources (CNQ).
Firms unaffected by the taxes still fell. That included Thompson-Reuters (TRI), Manulife (MFC), and Brookfield (BN). Investors may find bargains in the bank sector, such as TD Bank (TD), Royal Bank (RY), Bank of Nova Scotia (BNS), and CIBC (CM).
Canada could apply export controls on Canadian goods first. This would hurt Canada Goose (GOOS). Investors should hold international growth firms like Shopify (SHOP) instead.