Puck-drop season is right around the corner. And the trade war between Canada and the U.S. is starting to escalate again. While a new deal might not be all too far off (there have certainly been glimmers of hope even amid newly imposed tit-for-tat tariffs), I still think that Canadian investors should be prepared for a wild ride between now and year’s end as the list of affected goods looks to grow and/or the tariff amount looks to rise.
Indeed, anything is possible, including a deal that works out for both sides. Any way you look at it, I think inflationary pressures and the Trump administration’s desire for lower interest rates incentivize getting a deal done sooner rather than later.
For the most part, though, investors shouldn’t hit the panic button, especially as the non-stop tariff headlines keep coming in. One of the most peculiar items with U.S. tariffs slapped on them is hockey gear.
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Don’t expect stiff tariffs on hockey sticks to nudge the TSX even a little bit!
Indeed, it doesn’t get that much more Canadian than hockey sticks and skates, and while such tariffs would drive up the already high costs of getting into the sport, I think that there’s little, if anything, to worry over with the latest round of tariffs unless, of course, you’re in the market to buy new equipment in the U.S. at some point in the near future.
Even the firms with significant skin in the game, like Canadian Tire (TSX: CTC.A), which owns Sport Chek (a go-to place to buy all things hockey) as well as exclusive sporting brands like Sher-Wood (they make hockey sticks and other equipment), need not worry, at least in my humble opinion.
Even for a sports retailer, a 50% tariff on Canadian hockey sticks represents not much more than a drop in the bucket. And when you consider that so much of the hockey equipment is manufactured in Asia, it feels like hockey gear was more symbolic than anything else.
Sure, hockey is Canada’s game, but when it comes to the Canadian stock market, the exposure to skates, sticks, and all the sort is next to negligible. Indeed, the TSX Index is all about the financials (the Big Six banks and insurance firms), the energy firms (all across the stream), and the miners (precious metals, fertilizer, uranium, and beyond).
Where the tariffs hurt most
In short, a 50% tariff on hockey gear coming from Canada into the U.S. makes for a pretty bold headline. But, at the end of the day, it feels like something that won’t move the needle in the slightest.
In my view, it’s just something less impactful added to a long list of items that will increase costs for American consumers. As the trade war escalates, perhaps the biggest worry lies in rising tariffs targeting the auto sector. Indeed, the risk of job losses there has the potential to be severe.
The forestry industry is another corner that could bear the brunt of the damage as tariffs weigh and potentially worsen in the coming weeks and months. At the same time, though, once a deal is hit and the tariffs come off, things could reverse course and recover quite quickly. For now, it’s the uncertainty that hits the hardest, especially for those invested in some of Canada’s more vulnerable industries.
