Donald Trump’s trade war is back in focus, with tariffs on some of America’s closest allies—including Canada—threatening to disrupt supply chains and weigh on key industries. The uncertainty has already rattled TSX stocks, making it difficult to predict what happens next.
For investors, volatility presents both risk and opportunity. Here’s what experts are saying.
Buy: A Global Software Giant
Constellation Software (TSX:CSU) is built for uncertainty. The company owns nearly 1,000 niche software businesses worldwide, providing essential technology across a wide range of industries. That diversification helps cushion it from economic turbulence in any single region.
“Software companies with recurring revenue and diversified customer bases tend to be resilient in downturns,” says Greg Taylor, chief investment officer at Purpose Investments. “Constellation’s model of acquiring and optimizing businesses positions it well to navigate trade disruptions.”
The company thrives in both strong and weak economic environments. When markets are booming, it raises prices and accelerates sales efforts. When conditions deteriorate, Constellation can acquire struggling software firms at a discount. That ability to adapt makes it one of the most defensive growth plays on the TSX.
Buy: Canada’s Leading Grocery Stock
Loblaw (TSX:L) is another name that belongs in a trade-war-proof portfolio. The company dominates Canada’s grocery sector, giving it pricing power that helps offset inflation and supply chain disruptions.
“Grocery chains are classic defensive plays because people don’t stop buying food, no matter the economy,” says Barry Schwartz, portfolio manager at Baskin Wealth Management. “Loblaw’s scale allows it to negotiate better prices with suppliers, and its loyalty programs keep customers coming back despite higher costs.”
Loblaw’s stock has climbed 165% in the past five years, as inflation and economic uncertainty drive demand for staples. Its ability to quickly adjust pricing in response to tariff-related cost increases makes it a strong hedge against trade instability.
Avoid: A Struggling Recreational Stock
BRP (TSX:DOO) was a pandemic-era winner, but the recreational vehicle boom has faded. Demand for ATVs, snowmobiles, and personal watercraft has cooled, forcing the company to clear excess inventory with heavy discounts.
“A trade war could significantly increase manufacturing costs for BRP, which produces in Canada and Mexico,” warns Peter Hodson, founder of Canadian MoneySaver. “That’s a direct hit to margins at a time when the company is already under pressure.”
Competition in the powersports sector is also heating up, making it harder for BRP to pass on costs. While the stock looks cheap, rising tariffs could make it a value trap rather than a bargain.
Avoid: A TSX Auto Parts Giant
Magna International (TSX:MG) is one of Canada’s largest auto parts manufacturers, but it’s particularly vulnerable to trade disruptions. Auto components often cross the border multiple times before reaching final assembly, meaning tariffs could compound costs at every stage.
“Higher tariffs on auto parts could hit suppliers hard, as automakers may resist passing on the full cost to consumers,” says Brian Madden, chief investment officer at First Avenue Investment Counsel. “With demand for new vehicles already softening, Magna is facing significant headwinds.”
The stock has already struggled with supply chain disruptions and cost inflation. A renewed tariff war could make an already difficult situation worse, keeping pressure on margins and earnings.
The Bottom Line
Trade uncertainty is back, and not all TSX stocks are built to weather it. Defensive names like Constellation Software and Loblaw offer stability in a volatile market, while cyclicals like BRP and Magna face rising risks. Investors looking to de-risk should focus on companies with pricing power, diversified revenue streams, and the ability to navigate economic turbulence.