Earlier this month, U.S. president Donald Trump moved to ban certain Canadian dairy products from entering the United States after Canada introduced new retaliatory tariffs on U.S. goods. The import ban is set to take effect on September 29 and includes multiple types of whey protein, while additional Canadian cheese products are also being brought under the 50% tariff net. That clearly sounds uncomfortable for a Canadian dairy giant like Saputo (TSX: SAP) and its investors, as the company has a major U.S. presence.
But should the latest phase of the Canada-U.S. trade war really make investors rush for the exits on Saputo stock?
Let me explain how I’d approach the new U.S. dairy restrictions as a shareholder and whether they change my long-term view of the company.
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Saputo stock
Simply put, Saputo is one of the world’s largest dairy processors with operations spanning Canada, the United States, Australia, and Europe. Its products range from cheese and milk to cream, cultured dairy products, and dairy ingredients.
SAP stock currently trades at $40.05 per share with a market cap of roughly $16 billion. Although the stock has risen 21% over the last year, it has lost nearly 7% over the last six months. At today’s price, the company also offers an annualized dividend yield of 2.1%.
Recent weakness in SAP stock could mainly be attributed to the trade uncertainty around Canadian dairy. The White House first announced additional 50% tariffs on certain Canadian goods in July. Then, in September, the dispute escalated further as the United States moved to ban certain Canadian dairy products and expand tariffs to more dairy goods.
Still, you should avoid making your investment decision based only on the latest trade-war headlines, in my opinion. Let me explain why.
Strong earnings beneath the trade noise
Interestingly, Saputo’s improving operating and financial momentum is one of the biggest reasons long-term investors shouldn’t let the latest trade headlines alone drive their investment decisions.
In the first quarter of its fiscal year 2027 (ended June 2026), the company’s revenue rose 1.5% year over year (YoY) to about $4.4 billion. Higher dairy ingredient prices, stronger high-protein ingredient volumes, and selling price increases aimed at offsetting inflation all supported that improvement.
More importantly, Saputo’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) for the quarter climbed 7.6% YoY to $427 million. Its adjusted EBITDA margin also improved to 9.7% from 9.1% a year ago.
What’s encouraging is that Saputo’s stronger profitability was not limited to one region, as all four of its operating sectors delivered higher adjusted EBITDA.
In the United States, the dairy firm’s adjusted EBITDA rose 5.8% to $181 million. Higher sales volumes, stronger demand for high-protein ingredients, and operational improvements helped offset inflationary pressure from labour, logistics, and packaging costs.
Why investors should keep the bigger picture in mind
Clearly, the latest dairy ban could create a real risk, but Saputo is also reshaping its business and building more financial flexibility, which could give it strength during a temporary phase of trade uncertainty.
Notably, the company continues to invest in automation, production capacity, network optimization, and high-protein dairy products. It also expects operating efficiencies to improve as recent capital investments scale across the business.
Meanwhile, Saputo has been refining its portfolio. In June, it sold an 80% interest in its Argentina dairy business. More recently, in August, Saputo agreed to sell its United Kingdom operations to Lactalis.
Those moves should give the Canadian dairy processor more room to fund organic growth projects, pursue strategic acquisitions, and return capital to shareholders while maintaining balance sheet strength.
Given these strong fundamentals, I wouldn’t treat the latest trade headline alone as a reason to abandon Saputo stock. In fact, its improving margins, diversified operations, stronger balance sheet, and investments in high-protein products continue to support its long-term investment appeal.
