U.S. Midterms and Canada-U.S. Trade Talks: The TSX Sectors Most Exposed to Trump This Week

Get the latest on Trump’s trade strategies in light of the upcoming midterm elections. What does this mean for Canada-U.S. relations?

Puja Tayal

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Puja Tayal grew up in a small-business family where dinner conversations often centred on working capital and savings. Her early experiences with investing, particularly during the 2008 financial crisis, shaped her approach to understanding markets and evaluating investment opportunities. She began her career at a mutual fund company before moving into investor education and financial writing for asset and wealth management firms. Before joining The Motley Fool, Puja wrote for Market Realist, where she extensively covered the semiconductor industry. Her published work has also appeared in The Indian Express. Puja believes every stock has a story that can help investors understand its potential returns. She combines business analysis with different investing approaches to help investors make informed decisions and align their portfolios with their long-term financial goals. Outside of finance, Puja enjoys long drives, catching up with friends, watching superhero and science-fiction movies, and managing her family portfolio. She also has a keen interest in artificial intelligence and its potential to reshape the world.

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Bachelor's degree in Accounting and Finance, University of Mumbai (2007)
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Qualitative company analysis, management strategy, risk assessment, long-term investing, portfolio diversification and rebalancing, dividend reinvestment, cyclical growth opportunities, compounding strategies, growth stocks, and dividend stocks.

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Published November 2, 4:30 pm EST

The U.S. midterm elections are on November 3, and Donald Trump is under pressure from Michigan and Maine to end the trade war with Canada. Ahead of elections, Prime Minister Mark Carney and U.S. President Donald Trump met on Sunday for a constructive conversation. Can mid-term elections really give Canada-U.S. trade talks a new direction? Seems highly unlikely, noted Robert Bothwell, a University of Toronto historian.

Can trade talks ahead of midterm elections affect the stock market? Not exactly. After the 50% retaliatory tariffs episode in September, the TSX has hardly budged. Trade negotiations, if any, would be taken with a pinch of salt.

Warning sign with the text "Trade war" in front of container ship — Source: Getty Images

The TSX sectors most exposed to Trump this week

This week is full of noise and momentum as election news overlaps with earnings season. It means both short-term traders and long-term investors will actively participate in the stock market. The Trump volatility will put the automotive, steel, energy, and aerospace sectors in focus.

What to look for in aerospace stocks this week

Remember, Trump targeted Bombardier (TSX: BBD.B) in September, saying the jet maker should build in America to access U.S. markets. All the media attention did pull the stock price down for a week, but it bounced as the noise died and fundamentals kicked in.

Once again, Bombardier stock started with a 5.5% dip on Friday, October 30. But more than elections, this dip comes ahead of the November 5 earnings release. This third quarter is relatively a momentum builder for the fourth quarter as the business jet maker comes closer to its 2026 deliveries. The key focus will be on the order book, adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), and high inventory levels.

Trump’s stance on the automotive sector

Canadian cars, trucks, and automotive parts have also been on Trump’s radar, with a 50% retaliatory tariff due to begin on January 1, 2027. If the constructive conversation can stop this tariff from being implemented, Magna International (TSX: MG) will benefit the most.

Magna’s share price fell 12.5% between August 21 and September 21, when U.S.-Canada trade talks collapsed, and both parties slapped tariffs on each other. Magna has already absorbed the tariff cost in 2025. If the retaliatory tariff is cancelled, it could make a significant dent in its stock price.

Beyond the trade war, Magna’s share price jumped 3.8% on October 30 even after it reduced its 2026 sales outlook by $300 million to $41.6 billion at the midpoint. Behind the share price jump was a 38% increase in earnings per share as the company reduced its interest expense and repurchased shares.

One TSX energy stock Trump has great influence on

In the Sunday trade talks between Carney and Trump, construction of South Bow’s (TSX: SOBO) Keystone XL Pipeline was also a topic. This pipeline project has a patchy history that dates back to the Obama administration. Obama rejected, Trump approved, Biden rejected, and now once again Trump may supposedly approve. The Keystone System is South Bow’s major revenue generator. Thus, South Bow stock fell 9.6% in September when trade talks fell apart and surged ahead of positive trade talks and the November 4 quarterly earnings release.

Investor takeaway

Apart from these sectors, steel and agriculture have also been on Trump’s radar. Supply chain management software company Descartes Systems (TSX: DSG) has been hit by the trade war. The stock reacts positively to any signs of improvement in America’s trade volumes. The trade war has created a bottleneck in trade volumes, pulling down Descartes’s share price by more than 42% since January 2025.

The share price couldn’t sustain a recovery rally even after growing revenue and EPS and increasing cash reserves. The stock recovered 34% between August and October ahead of the holiday season as fears of retaliatory tariffs kicking in on January 1, 2027 pulled export-import volumes to the end of 2026.