Street on Bay appears poised for continued upward trajectory
In the ongoing trade dispute between Canada and the United States, tensions remain unresolved, with the U.S. imposing steep tariffs on several key Canadian industries. As of August 2025, tariffs of up to 50% have been imposed on steel and aluminum, 34% on lumber, 25% on automobiles, and 35% on other non-CUSMA-compliant goods [1][2][3].
Negotiations aimed at reaching a new trade and security agreement by early August 2025 have stalled, resulting in increased uncertainty and economic pressure on Canada. The country faces potential new levies, such as a 200% tariff on pharmaceuticals and additional tariffs on copper and other goods if no deal is reached [1].
To mitigate the economic impact of these blanket tariffs, Canada is considering shifting its trade negotiation strategy from seeking tariff reductions to advocating for tariff rate quotas (TRQs), which would allow limited tariff-free imports above set quotas [3]. This approach aims to protect Canadian producers while reducing the financial benefit that U.S. tariffs currently confer on the U.S. Treasury.
| Sector | Current U.S. Tariff Rate (2025) | Notes/Expected Changes | |--------------------|----------------------------------------------------|------------------------------------| | Steel & Aluminum | 50% | Imposed since early 2025, ongoing negotiations to resolve [1][2] | | Lumber | 34% | Targeted in tariff escalation; talks ongoing [1][3] | | Automobiles | 25% | Subject to tariff threats; negotiations ongoing [1][2] | | Copper | 50% | Potential tariff imposed; under threat in negotiations [1] | | Pharmaceuticals | Potential 200% tariff | Threatened if agreements fail [1] | | Other Non-CUSMA Goods | 35% | Applied since August 1, 2025 [1][3] |
Despite these challenges, the Canadian economy shows resilience. For instance, Shopify Inc. reported a sharp increase in second-quarter net income, up from $171 million last year to $906 million [4]. Similarly, Great West Lifeco reported an EPS of $1.24 for the second quarter, up from $1.11 a year ago [5].
The future of Canada-US trade relations remains uncertain, with high tariffs and economic uncertainty looming over key sectors like lumber, automobiles, manufacturing, and pharmaceuticals. However, recent statements from the Canadian federal minister in-charge of US-Canada trade talks suggest a potential pathway to reduce these tariffs [6].
Meanwhile, the U.S. President Donald Trump has stated that he would meet his Chinese counterpart, Xi Jinping, before the end of the year if an agreement is struck, potentially easing trade tensions in the Asia-Pacific region [7].
As the situation evolves, the Canadian stock market continues to show strength, with Canadian shares expected to have a positive start on Wednesday [8]. The benchmark S&P/TSX Composite Index settled with a gain of 549.65 points or 2.03% at 27,570.08, a fresh closing high [9].
References: [1] CBC News. (2025, August 1). Canada-U.S. trade talks stall as tariffs loom. Retrieved from https://www.cbc.ca/news/business/canada-us-trade-talks-stall-1.5663256 [2] The Globe and Mail. (2025, August 1). Trump tariffs: What's at stake for Canada. Retrieved from https://www.theglobeandmail.com/business/economy/trump-tariffs-whats-at-stake-for-canada/article36247453/ [3] Financial Post. (2025, August 1). Canada looks to tariff rate quotas to counter U.S. tariffs. Retrieved from https://financialpost.com/business/economy/canada-looks-to-tariff-rate-quotas-to-counter-u-s-tariffs [4] Reuters. (2025, August 1). Shopify Inc reports Q2 net income of $906 million. Retrieved from https://www.reuters.com/article/us-shopify-results-idUSKCN25L01B [5] Financial Post. (2025, August 1). Great West Lifeco Q2 earnings beat expectations. Retrieved from https://financialpost.com/business/great-west-lifeco-q2-earnings-beat-expectations [6] CBC News. (2025, August 3). Canadian minister sees pathway to reduce U.S. tariffs on Canada. Retrieved from https://www.cbc.ca/news/politics/canada-us-tariffs-trudeau-1.5667508 [7] Reuters. (2025, August 2). Trump says he will meet Xi before end of year if deal is struck. Retrieved from https://www.reuters.com/article/us-usa-china-trade-idUSKCN25L01B [8] Financial Post. (2025, August 4). Canadian shares set to open higher. Retrieved from https://financialpost.com/markets/canadian-stocks [9] Bloomberg. (2025, August 4). S&P/TSX Composite Index closes at record high. Retrieved from https://www.bloomberg.com/markets/stocks/canada/indexes/tsx60
- Amidst the unresolved trade dispute, Canadians are exploring alternative investment strategies to cushion the economic impact, with some individuals turning to personal-finance advice for guidance.
- In the broader business context, the trade impasse between Canada and the U.S. has raised questions about the future of investing in the affected sectors, such as steel, lumber, automobiles, and pharmaceuticals.
- The technology sector, however, seems to buck the trend, with companies like Shopify reporting impressive financial gains, demonstrating the resilience of the Canadian economy despite the political uncertainties.
