With President Trump’s recent reintroduction of tariffs on Canadian imports, markets are bracing for yet another round of trade tensions. While tariffs often spell trouble for certain industries, these can also create opportunities for others. Investors looking to take advantage of shifting economic conditions may find strong potential in two Canadian giants: Canadian Pacific Kansas City (TSX: CP) and Enbridge (TSX: ENB). These companies, which dominate rail transportation and energy infrastructure, respectively, are well-positioned to benefit from increased demand for domestic and North American trade solutions.
If you’re looking to invest in stocks that could thrive under these new trade conditions, a $25,000 investment split between CPKC and Enbridge could provide both growth potential and stability. Let’s break down why these companies stand out amid the latest policy changes and how they could benefit your portfolio.
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CPKC
CPKC’s latest earnings report reflects strong financial performance, reinforcing its position as a long-term investment. The company reported third-quarter revenue of $3.9 billion, a 6.3% increase year over year, alongside 7.3% earnings growth. Its profit margin stands at a solid 24.5%. Plus, the return on equity remains steady at 8.09%, demonstrating the company’s ability to generate profits while maintaining operational efficiency. With quarterly earnings consistently improving and a market cap of over $107 billion, CPKC remains a dominant force in North American transportation.
Tariffs often lead to supply chain realignments, and this is where CPKC shines. Higher tariffs on foreign goods could push manufacturers and distributors to increase intra-North American trade, favouring rail networks like CPKC. Businesses looking to avoid costly overseas import fees may shift production to Mexico or the U.S., with Canadian businesses benefiting from stronger trade ties within the continent.
CPKC’s network also benefits from the United States-Mexico-Canada Agreement (USMCA). This ensures tariff-free trade within North America in key sectors. As more companies turn to regional suppliers and manufacturers, demand for cross-border rail shipments is likely to grow, positioning CPKC for increased freight volume and revenue.
Enbridge
Enbridge’s financials are equally impressive. In its most recent quarter, the company reported $48.55 billion in revenue, a 51.2% increase year over year. Net income rose to $6.29 billion, and quarterly earnings growth surged by 124%, highlighting the company’s strong operational performance. Enbridge also pays a reliable 6% dividend yield, making it a lucrative stock for investors seeking both growth and passive income.
As energy markets react to tariffs, U.S. refiners may increase their reliance on Canadian oil, especially since U.S. domestic production has not been able to fully meet demand. Enbridge’s pipelines provide a direct, cost-effective route for Canadian oil to reach U.S. markets, reducing the impact of tariffs on energy trade. This could lead to higher utilization of Enbridge’s pipeline capacity, driving up revenues and profits.
Another key factor in Enbridge’s favour is its diversified business model. While its oil pipelines are a major revenue driver, the company has steadily increased investments in natural gas and renewable energy projects. With global energy demand expected to rise, Enbridge’s ability to adapt to both fossil fuel and renewable markets makes it a resilient long-term investment.
Foolish takeaway
While trade tensions can create uncertainty, they also reshape market opportunities. Companies that adapt to new trade policies and leverage regional advantages tend to come out ahead. CPKC’s rail network expansion and Enbridge’s energy infrastructure dominance make them two of the most promising Canadian stocks in this shifting environment.
Trade tensions between Canada and the U.S. are nothing new, but smart investors know that uncertainty creates opportunities. CPKC and Enbridge stand out as two Canadian powerhouses ready to capitalize on shifting trade policies, offering both stability and upside potential. By investing $25,000 split between these stocks, you’re positioning yourself for growth in rail logistics and energy infrastructure. Two sectors that will remain critical no matter how trade policies evolve. If you’re looking to profit from Trump’s tariffs while securing strong long-term investments, CPKC and Enbridge are two of the best choices in the Canadian market right now.
