During a press conference at Mar-a-Lago, President-elect Donald Trump reignited controversy by suggesting that Canada should become part of the U.S. and hinted at imposing steep tariffs on Canadian and Mexican goods. When asked if he’d consider military action to annex Canada, he responded, “No — economic force,” and said that the U.S. “basically protects” Canada and subsidizes it by $200 billion annually. This is likely a reference to the trade deficit, but the $200 billion figure far exceeds the official $40.6 billion trade deficit that is driven mainly by energy imports.
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Unsurprisingly, Canadian Prime Minister Justin Trudeau fired back on X by saying there is “no snowball’s chance in hell” that Canada would join the U.S. While his government had previously shrugged off such comments as jokes, things are staring look a little more serious now. However, this is likely a negotiation tactic by Trump.
Trump Dismisses Canada’s Contributions
In addition, Trump dismissed Canada’s contributions by stating that the U.S. doesn’t need Canadian lumber, dairy, or auto parts, and even floated the idea of using executive orders to boost domestic lumber supply. Canada, in turn, has reportedly considered export taxes on vital commodities like uranium, oil, and potash in case a trade war erupts.
The Canadian dollar fell slightly after Trump’s tariff threats, and political uncertainty in Canada continues after Trudeau resigned on Monday. Still, Conservative leader Pierre Poilievre reaffirmed that Canada will remain independent as he gears up for a likely election bid.
Is the iShares S&P/TSX 60 Index ETF (XIU) a Buy?
The iShares S&P/TSX 60 Index ETF (TSE:XIU), which tracks the performance of the 60 largest publicly traded stocks in Canada, fell in today’s trading. However, despite the uncertainties in the country, it has a Moderate Buy consensus rating among 62 Wall Street analysts. That rating is based on 49 Buys and 13 Holds assigned in the last three months. In addition, after a 21% rally in the stock price over the past 12 months, the average price target on the XIU ETF of $43.21 implies 14.4% upside from current levels.
