Jefferies Three TSX stocks that could benefit from U.S. tariffs
Trump trading
Energy, insurance best positioned to weather tariffs
The main economic proposals of the imminent presidential administration are all negative for the Canadian economy, according to Jefferies equity analyst John Aiken. The U.S. is the destination for roughly 75 per cent of Canadian exports, so the imposition of tariffs is an obvious inconvenience. Importantly, Mr. Aiken believes that oil and gas will be exempt from new tariffs as part of U.S. energy security concerns.
Donald Trump has stridently proposed corporate tax cuts which, if implemented, would further underscore the tax advantage of operating in the U.S. versus Canada, and may result in domestic firms relocating operations southward.
The new president is also expected to deregulate U.S. industries, particularly finance, and this will make U.S. firms even more competitive relative to Canadian counterparts.
These America-first policy proposals have already resulted in a strengthening U.S. dollar, and Mr. Aiken sees no near-term end to the sliding loonie trend.
Mr. Jefferies suggests domestic energy stocks, likely exempt from tariffs and generating revenue in U.S. dollars, as promising investments for the next four years. Mr. Aiken mentioned the deceptively named Tourmaline Oil Corp. (TOU-T) and Strathcona Resources Ltd. (SCR-T) as specific opportunities.
The analyst also cited Sun-Life Financial Inc. (SLF-T), which generates 60 per cent of its revenue in greenbacks and will benefit from deregulation, as another domestic stock with a strong outlook.