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Our Portfolio Manager, Sam LaBell, appeared on two segments on BNN Bloomberg recently to discuss potential U.S. tariffs and his top picks.
How Canada can absorb a 10% tariff
Sam outlines how Canada could absorb a 10% tariff but how a 25% tariff would be devastating. He also thinks tariffs are very likely.
“We all know Trump has campaigned on raising revenue through tariffs,” Sam said, noting revenues are needed to fund the deficit and extend Trump’s 2017 tax cuts. “All of his administration is talking about tariffs as a source of revenue. It’s part of his platform. It’s part of his policy.”
“At 10%, we would absorb the hit because, effectively, our exchange rate would come down a little bit, and the U.S. consumer would pay for a portion of it,” Sam said. “Canada can compete under a 10% tariff. Obviously, it would be a slowdown in our export sector, but I don’t think that is necessarily tied to a recessionary scenario.”
Watch the replay: How Canada can absorb a 10% tariff
Energy and banks: Portfolio manager on investing amid tariff conflict
Tied to his thesis that the Canadian energy sector can absorb a 10% tariff, Sam discusses his Top Picks in energy: Canadian Natural Resources Ltd. (NYSE, TSX: CNQ), Cenovus Energy Inc. (NYSE, TSX: CVE), and ARC Resources Ltd. (TSX: ARX).
In utilities and pipelines, he also discusses Enbridge Inc. (NYSE, TSX: ENB) and South Bow Corp. (NYSE, TSX: SOBO).
Finally, he discusses Air Canada (TSX: AC) and Toronto Dominion Bank (NYSE, TSX: TD).
TD can’t grow its capital or assets in the U.S. because of the money laundering remediation orders, but there are ways to shift capital, provide services and still make money. “I think there is a real deep value position here and we do like banks that have a U.S. operation and a Canadian operation as it hedges your risk.”
Watch the Replay: Energy and banks: Portfolio manager on investing amid tariff conflict