Tariffs took the market by storm in 2025 as companies absorbed the tariff costs. The year 2026 began with a new war with Iran, which the United States initiated. The upcoming renewal of the United States–Mexico–Canada Agreement (USMCA) on July 1 could reset the trade between Canada and the US. This free trade agreement is important for electronics manufacturing companies like Celestica (TSX:CLS), business jet maker Bombardier (TSX:BBD.B), and automotive components supplier Magna International (TSX:MG).
The three companies trade raw materials and components between the US and Canada to produce the end product. A tariff on USMCA exceptions could make cars, business jets, and Artificial Intelligence (AI) data centres and network infrastructure expensive.
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Worried about tariffs?
If the United States imposes tariffs even on USMCA exemptions, the above stocks could see a sharp correction as they did during the Iran war.
Bombardier stock fell 17.7% till March 20 as the Iran war affected fuel prices. It recovered 19% in the first half of April, as the US announced a two-week ceasefire. A similar V-shaped rally is possible as the July 1 negotiations near. At present, it is difficult to predict what will happen on July 1. You could consider buying the dip as the business jet maker will find an alternative if the USMCA negotiations fail.
Celestica is looking to circumvent tariff uncertainty by investing $1 billion on expanding manufacturing plants in Taiwan, Japan, Mexico, and Texas. The stock has surged almost 50% in April ahead of the first-quarter earnings on April 26.
Meanwhile, Magna mitigated the tariff impact with tighter cost control, strong financial discipline, and improved efficiency from AI scheduling. In the first quarter of the tariff announcement in 2025, Magna stock fell 26% between January 1 and mid-April 2025. Then the stock grew 109% till February 2026. Once again, the stock witnessed a sharp 23% dip from its February 2026 high as the first quarter is seasonally weak. July 1 could see sharp momentum depending on the negotiations.
Are you still worried about tariffs?
2 TSX stocks I’d buy and hold
The above three stocks initially fell from trade tensions but were quick to recover as tariffs hit other countries as well, removing the cost disadvantage from tariffs. While these stocks have rallied to significant lengths, they may not be a buy at their current price.
Two Canadian stocks that are benefiting from tariff wars are TC Energy (TSX:TRP) and Bird Construction (TSX:BDT). Canada is expanding its export market by investing in energy infrastructure to make its production from oil sands reserves accessible to international markets. TC Energy’s strength is its Nova Gas Transmission Line (NGTL) that collects gas from Alberta and connects it to the export pipeline Coastal GasLink. This pipeline directly connects to Canada’s liquified natural gas (LNG) export facility, LNG Canada.
TC Energy is a stock to buy on the dip, as tariff wars have encouraged Canada to reduce its reliance on the US and start exporting from its domestic facility. The next five years could see a sharp increase in its share prices as new pipeline projects come online.
Bird Construction will build the energy infrastructure, which will increase its order books. The company will work towards faster execution of projects to make way for new ones. Canada’s infrastructure push from AI data centres to LNG export facilities will bring money to Bird. It is a stock to buy on the dip as they are in a growth cycle and could rise further.
