Are you looking for tariff-resistant TSX stocks that can withstand Trump’s trade war?
If so, you might want to look into real estate investment trusts (REITs), utilities, and consumer staples. REITs and utilities have very domestic-oriented operations that aren’t hit by tariffs, and consumer staples like grocery stores can actually gain from tariffs by offering Canadian products to those trying to buy locally. In this article, I will explore three TSX stocks that are totally shielded from Trump tariffs.
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Loblaw
Loblaw (TSX: L) is a tariff-resistant Canadian grocer that operates a nationwide grocery chain. The company has pursued a localization strategy that has resulted in it operating under different names in different provinces (e.g., Superstore, Loblaw, Dominion, etc.), but essentially, it’s all one chain.
Now, if you’re familiar with Loblaw stores, you might be scratching your head right now. “Don’t those stores have all kinds of American brands in them?”
Yes, they do, but keep two things in mind:
- An American brand does not mean American-made. Many American food and beverage products are made locally in Canada. A good example of this is Pepsi drinks, which are bottled in Canada.
- Loblaw has an extensive line of store-brand President’s Choice products that are 100% Canadian-made.
- The company has been labelling its products as Canadian when applicable, a wise marketing decision that may drive increased sales and customer loyalty if Trump doesn’t back off.
Killam
Killam Apartment REIT (TSX: KMP.UN) is a Canadian REIT that operates exclusively in Canada. It operates primarily in East Coast markets like Newfoundland, Nova Scotia, and Ontario. As a residential REIT, its rents are not too subject to tariff-sensitive tenants such as manufacturers and (some) retailers. Instead, it makes money primarily off of Canadian residents’ incomes, only a small portion of which are impacted by tariffs. The company delivered modest growth in revenues, as well as high growth earnings and cash flows, in the trailing 12-month (TTM) period. It is also highly profitable, boasting a 60% operating income margin and a 5.6% adjusted funds from operations (AFFO) yield. It could be worth a look.
Fortis
Last but not least, we have Fortis (TSX: FTS). Fortis is a Canadian utility company that operates in Canada, the U.S., and the Caribbean. The company is best known for its long dividend-growth streak, having raised its dividend for 51 consecutive years. Fortis does have U.S. operations, but they don’t necessarily run on exported power. Fortis is primarily a distributor of power, not a producer (it does own some hydro plants). The energy mix in Fortis’s U.S. business is tariff-resistant, as it operates utilities in Arizona and New York. Canadian energy companies sell energy to these states, but both have a mix of local and Canadian suppliers, with utilities free to bid on the energy they choose. As for Fortis’s Canadian and Latin American operations, those aren’t impacted by Trump tariffs in any way. So, Fortis is pretty tariff-resistant.
Foolish bottom line
When Trump’s tariffs were first announced, they sent Canadians into a panic. It looked like they were going to crash our economy! But now, with many being walked back, tariffs seem like less of a threat. If you’re still concerned about their investment implications, you could consider an investment in one of the stocks above.
