The Toronto Stock Exchange (TSX) is down 367 points, or nearly 2%, after Canada’s government announced a series of retaliatory tariffs on U.S. imports amid an escalating North American trade war.
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Canada’s benchmark stock exchange is trading at 25,165.90, its lowest level since the U.S. election last November that returned Donald Trump to the White House. The drop in the Toronto Stock Exchange comes after Canada’s federal government in Ottawa announced plans to impose retaliatory tariffs on $155 billion worth of U.S. imports as the country hunkers down for a trade war with America.
Specifically, the government of Prime Minister Justin Trudeau is placing 25% tariffs on U.S. goods ranging from orange juice to bourbon as they enter Canada. At a news conference, Trudeau said that tariffs will be placed on $30 billion worth of American imports on Feb. 4, and the remaining $125 billion will come into effect within 21 days.
Tit-for-Tat Tariffs
The retaliatory tariffs from Ottawa come in response to U.S. President Donald Trump declaring a trade war on Canada, imposing 25% tariffs on virtually all goods from Canada and a lower 10% tariff on Canadian crude oil and natural gas. Trudeau said that the Canadian duties being imposed on American imports are countermeasures meant to hit back at the U.S. economy.
U.S. products that Canada is targeting in its first round of tariffs on Feb. 4 include orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics, and pulp and paper. The second $125 billion round of tariffs will include passenger vehicles and trucks, steel and aluminum products, fruits and vegetables, beef, pork, dairy, recreational vehicles, and boats.
Canada’s government has also threatened to place export duties on energy products sent to the U.S. and even limit exports of crude oil and natural gas to the U.S. Trudeau and Trump are reportedly scheduled to have a phone conversation and discuss the tariffs later on Feb. 3.
Is the Vanguard FTSE Canada All Cap Index ETF a Buy?
The Vanguard FTSE Canada All Cap Index ETF (TSE:VCN), which provides broad exposure to Canadian equities, has a consensus Moderate Buy rating based on 160 Wall Street analysts. That rating is based on 132 Buy, 26 Hold, and two Sell recommendations issued in the last three months. The average VCN price target of $58.61 implies 13.09% upside from current levels.
