Buying Canadian Isn’t as Easy as It Sounds (eh?)

By Will Ashworth

As I write this on Wednesday morning from my home in Nova Scotia, tariff turmoil ensues.

My government has announced it will impose new retaliatory tariffs on more than $20 billion worth of U.S. imports in response to the latest Trump moves. That is on top of 25% tariffs that outgoing Prime Minister Justin Trudeau announced earlier this month after an initial round by the 11th province (it’s not so funny when it’s your country, is it…).

The U.S. continues to spew absolute nonsense about fentanyl into the U.S. from Canada. U.S. Commerce Secretary Howard Lutnick continues to tow the country line. 

“Lutnick said Trump is using the tariffs against Mexico, Canada and China to prod the countries to stop the flow of undocumented migrants and illegal drugs into the U.S.,” BNN Bloomberg reported just days ago.

“‘If fentanyl ends, I think these will come off,’ he said. ‘But if fentanyl does not end, or he’s uncertain about it, they will stay this way until he is comfortable.’”

After a comment like this, I hope this trade war destroys the entire U.S. bourbon industry despite the fact I’m a big bourbon drinker. However, the other two whiskies, Canadian and Scotch, will be my drinks of choice until tee-totaler Trump ends this madness. 

The good news is that the Trump administration has paused Canada and Mexico’s 25% tariffs on products covered under the CUSMA (Canada-U.S.-Mexico Agreement) until April 2. Approximately 50% of Mexican and 38% of Canadian imports are covered under CUSMA. At the same time, the administration will also implement reciprocal tariffs on countries that retaliated against the U.S. tariffs, such as Canada and Mexico. 

I would hate to own a business that competes in both countries because the new administration has created an impossible situation for them. Washington's stop-and-start approach is certifiable.  

Many Canadians have bought Canadian-made products to protest America’s 25% tariffs on Canadian products imported south of our border. As Prime Minister Justin Trudeau said on March 4, “The tariffs are a dumb idea.”

The Wall Street Journal Opinion page asked earlier today, “how do you like the trade war now?”

Business think tanks in North America have said Trump’s plan is economic suicide. Companies on both sides of the border are unsure why Trump has started a trade war when the U.S. economy is slowing, accelerating the likelihood of a recession. 

Regardless of whether the tariff issue is satisfactorily settled, a push to buy Canadian products remains a good idea. Given the Trump administration's irrational behavior and decision-making, Canada can no longer rely on the U.S. as a viable trading partner. 

This has me thinking about buying Canadian when it regards investing and stocks.

Just as it’s not easy to know the difference between “Made in Canada” and “Product of Canada,” it’s hard to determine how Canadian a TSX-listed stock is.  

For example, Alimentation Couche-Tard (TSX:ATD) is based in Montreal, but has just 13% of its 16,861 convenience stores in Canada, generating 12% of its revenue. Further, Executive Chairman and co-founder Alain Bouchard owns 12.9% of the company. He is the only shareholder with a stake over 10%. In addition, the Caisse de dépôt et placement du Québec, the investment manager that manages the Quebec pension fund, also owns 4.4%. 

So, let’s assume you want to be patriotic by owning Canadian stocks only. It’s easier said than done. Further, investing heavily in Canada may not be in your best interest. The country’s markets account for just 2% of the $60.1 trillion global market cap. 

In addition, between 1988 and 2024, the S&P 500 Index averaged an annual return of 11.09%, 425 basis points higher than the S&P/TSX Composite Index. While past performance is no guarantee of future results, if you had invested $10,000 in both indexes, at the end of 37 years, you would have an additional $374,097 (423%) from the S&P 500. 

In the weeks ahead, I’ll report on Canadian stocks to buy that meet three conditions: They’re listed on the TSX or TSX Venture; They generate 51% of their annual revenue from Canada; and, They are 51%-owned by Canadians. 

First up is Restaurant Brands International (TSX:QSR), the owner of iconic Canadian brand Tim Hortons. 

I’m looking forward to helping patriotic Canadians make informed decisions about which stocks to buy and which to leave on the sidelines.

Vive le Canada!

Disclaimer: The author did not hold a position in any of the securities mentioned above. The information provided in this article is for educational and informational purposes only and should not be construed as investment advice. Always conduct your own research or consult with a licensed financial professional before making any investment decisions. Past performance is not indicative of future results.

Will Ashworth is currently ranked 304 out of 30,810 financial bloggers analyzed by TipRanks, with a 13.3% return on his buy and sell ratings. He is one of the founding contributors to this newsletter.

Will has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.