Trump Trade: Canada reaches deal with U.S. to pause tariffs for 30 days

Catch up on the top industries and stocks that were impacted, or were predicted to be impacted, by the comments, actions and policies of President Donald Trump with this daily recap compiled by The Fly:

TARIFF PAUSE: On his X account, Canada’s Prime Miniter Trudeau stated that, “I just had a good call with President Trump. Canada is implementing our $1.3 billion border plan – reinforcing the border with new choppers, technology and personnel, enhanced coordination with our American partners, and increased resources to stop the flow of fentanyl. Nearly 10,000 frontline personnel are and will be working on protecting the border. In addition, Canada is making new commitments to appoint a Fentanyl Czar, we will list cartels as terrorists, ensure 24/7 eyes on the border, launch a Canada- U.S. Joint Strike Force to combat organized crime, fentanyl and money laundering. I have also signed a new intelligence directive on organized crime and fentanyl and we will be backing it with $200 million. Proposed tariffs will be paused for at least 30 days while we work together.”

RESTAURANTS: The tariffs announced by President Trump on imports from Canada and Mexico were temporarily suspended, but the overhang remains, Bernstein tells investors in a research note discussing the U.S. Restaurant sector. The firm believes that the direct impact of tariffs on the supply chain will be marginal for our coverage. Overall, of the US consumption only a marginal component comes from imported food. Bernstein sees greater risk for restaurants that sell imported baked goods, fresh fruit and vegetables including avocados. On the other hand, the indirect impact of tariffs may shrink the consumers’ disposable income and suppress their demand for dining out, Bernstein argues. Finally, the firm is worried that the tariffs on China imports may impact the construction costs and reduce the net unit growth of the industry, impacting primarily the concepts that have greater expansion plans in the US and that have to face the reality of increasing equipment costs. Net-net, Bernstein’s “unconventional view” is that restaurants could actually emerge stronger if tariffs are reinstated. Due to the higher exposure to low-income consumers, this set-up favors Darden (DRI), Restaurant Brands (QSR), Wingstop (WING), McDonald’s (MCD) and Yum! Brands (YUM), while the firm sees marginal risks for Chipotle (CMG) given the greater exposure to avocado and fresh produce.

ADDITIONAL TARIFFS: The Customs Tariff Commission of the State Council of China issued a notice levying additional tariffs on certain imported commodities originating from the United States. At the same time, China has filed a complaint at the World Trade Organization against the 10% tariff imposed by the United States on Chinese products. Starting February 10, China will impose an additional tariff of 15% on coal and liquefied natural gas and a 10% tariff on crude oil, agricultural machinery, large-displacement automobiles and pickup trucks, the government said. “The U.S. has levied a 10 percent additional tariff on Chinese imports under the pretext of the fentanyl issue. China firmly deplores and opposes this move. China has taken necessary countermeasures in accordance with relevant laws and regulations and the basic principles of international law, which are completely justified and reasonable. Meanwhile, China has filed a lawsuit with the WTO to firmly safeguard its legitimate rights and interests,” the China’s embassy spokesperson said.

GOOD FOR STAPLES RETAILERS, BAD FOR CONSUMERS: Tariff risk continues to rise, Wells tells investors in a research note. While the firm thinks the Mexico/Canada situation is fluid, broad tariffs could likely spark some acceleration in food inflation. It sees this as good for staples retailers, but bad for consumers. China seems manageable, for now, Wells adds. The firm is skeptical about tariffs on food; if it occurs, it sees staples retailers and distributors benefiting from inflation. Walmart (WMT), Kroger (KR), Albertsons (ACI), and Sprouts Farmers (SFM) look well positioned. Recent tariff news should continue to represent an overhang for discretionary names like Five Below (FIVE), Dollarama (DLMAF), and Target (TGT), Wells says.

DIVERSIFIED SUPPLY CHAIN: GoPro (GPRO) announced that its diversified supply chain mitigates the potential impact of U.S. tariffs. The company does not expect U.S. consumer pricing or gross margin to be materially affected by recent U.S. tariff announcements on in-bound goods to be sold in the U.S. “Over the last few years, we proactively moved our U.S.-bound camera production outside of China, which has significantly reduced the impact of tariffs,” said Brian McGee, CFO and COO of GoPro. “We are continuously evaluating and optimizing our supply chain to improve delivery of our products at lower cost.”

REGIONAL BANKS: Wells Fargo believes that short-term tariffs may help U.S. regional banks relative to GSIBs given downside risks — stronger dollar, lower trade flows, delayed IB, potential escalation — vs. upside — more possible U.S. investment. The firm’s favored regionals include PNC Financial (PNC) and Fifth Third Bancorp (FITB).

EDUCATION DEPARTMENT: White House officials are considering executive actions to dismantle the Department of Education as part of the campaign by Elon Musk and his allies to shrink federal agencies and slash the size of the government workforce, The Wall Street Journal’s Matt Barnum, Liz Essley Whyte, and Ken Thomas report. According to people familiar with the matter, officials have discussed an executive order that would shut down all functions of the agency that aren’t written explicitly into statute or move certain functions to other departments, and the order would call for developing a legislative proposal to abolish the department. Trump’s advisers are debating the specifics of the order and the timing, the people say. Publicly traded companies in the space include Adtalem Global Education (ATGE), American Public Education (APEI), Grand Canyon (LOPE), Lincoln Educational (LINC) and Strategic Education (STRA).

TIKTOK BUYOUT: U.S. President Donald Trump signed an executive order ordering the creation of a sovereign wealth fund within the next year, saying it could potentially buy TikTok, Reuters’ Trevor Hunnicutt and Pete Schroeder report. It is unclear how such a wealth fund would work and Trump offered little in the way of detail, the report notes. “We’re going to create a lot of wealth for the fund,” Trump told reporters. “And I think it’s about time that this country had a sovereign wealth fund.” President Donald Trump told reporters last week that Microsoft (MSFT) is in talks to buy TikTok and that he’d like to see a bidding war over the social media app, Reuters reported this week. Companies in the social media space that compete with TikTok include Meta (META), Alphabet’s YouTube (GOOGL), Pinterest (PINS), Reddit (RDDT) and Snap (SNAP).

CORPORATE AMERICA DEALS: America’s largest companies are making deals with Elon Musk’s businesses or touting links with him as he solidifies his power in Donald Trump’s administration, Joe Miller, Claire Bushey, Rafe Uddin, and Hannah Murphy of The Financial Times reports. These deals include Visa (V) finalizing a payment processing deal with Musk’s social media platform X, United Airlines (UAL) accelerating a plan to use Musk’s Starlink satellites for in-flight Wifi, and Amazon (AMZN) boosting its marketing spending on X. Other companies who recently cut deals or made amends related to Musk include Apple (AAPL), Boeing (BA), Oracle (ORCL), and JPMorgan (JPM).