Great rate or low rate? That is the question. There have been months of negotiations, but there has rarely been a solution that is hospitable for everyone. That is the state of world trade. Protectionist measures of the world’s largest consumer, the United States, have made it expensive for the world to gain access to the American market. The tariff uncertainty has made investors and companies indecisely on the road that lies in front of us and therefore affected the stock markets worldwide.
Why the tariff uncertainty?
The US President Donald Trump recently negotiated a rate of 15% with Europe and Japan, a shift of the previously 30% and 25% rates proposed on 1 August. The two countries also promised to invest in the United States. Although these negotiations were considered a victory by the two countries, Trump did not negotiate steel and aluminum imports to the United States.
The next in line is Canada. Europe and Japan are not as dependent on the United States as Canada. The Prime Minister of Canada, Mark Carney, stated that the geographical proximity of the country and the export of energy to the US have put it in a different situation. Canada has a free trade agreement on certain goods and expects to retain it. Bombardier was a beneficiary of this agreement.
Moreover, Canada has a lower rate of 10% on the oil export. The negotiations will determine whether the rate of 20% on other goods is increasing to 35% or is reduced. When such uncertainty exists, investors, consumers and companies block their decisions.
Low business and investment activity stagnates growth. Sometimes the panic among investors creates, who then opt for safer shares that continue to do things or benefit from the situation.
Two steadfast Canadian shares to buy during tariff uncertainty
Canadian energy stocks have the greatest exposure to export to the United States. While Canada imports various supermarket articles from the United States. Since the dependence on Canada of American exports is greater, it only imposes counter-tariff policy for products for which it has alternatives. Loblaws (TSX: L) The win of the second quarter reflected that.
Lobin
Loblaw noted that Canadians are looking for value, quality and service. The food store company saw growth in traffic, mand size and items from the same stores as the grocer aimed at a hard discount and real Canadian Superstores banners. The pharmacy brand of the grocer, Shoppers Drug Mart, saw strong growth of specialties and prestige beauty categories.
Loblaw quickly expands. It is on schedule to open about 80 new stores and 100 new pharmacy clinics this year to increase the reach of more communities in Canada. More stores will lead to more income.
The Cyclic Rally of LOBLAW can be attributed to a shift in buying trends in the consumer to products with a discount. In a heavy economy, Loblaw performs better than underresting in a growing economy such as buying shifts to discretionary.
Loblaw shares rose by 30% between February 21 and May 30, during the first round of Trump rates. That was the time that the entire Toronto Stock Exchange (TSX) fell. If the tariff negotiations move in favor of Canada, Loblaw shares can stagnate. But if the negotiations go aside and a higher rate is implemented, LOBLAW shares can collect because consumers can store goods before the new High-Tariff goods get the shelf.
Loblaw also splits its shares 4-out-1, with effect from 18 August, to make them accessible to retail investors. It means that you do not have to recover more than $ 220 to buy one share. They will be available for less than $ 60, depending on what the stock price is in August.
Descartes Systems
While Loblaw gives you a contrary approach, Descartes Systems (TSX: DSG) Give you a buy-the-dip approach. Currently, the share fell by 16% compared to the peak of February when the tariff uncertainty began. The Supply Chain Solutions provider is affected by a delay in trading activity, because companies use a wait -and -see approach. A favorable negotiation can pump trading activities while companies are preparing for the holiday season.
The TariefdeAdline of August 1 stuck the Season Rally from Descartes. This is the time to buy the share, because the seasonal rally could increase the stock price by more than 30%. The company is well prepared to adopt higher trade volumes.
Conclusion
Every scenario offers an opportunity. Following the money path will tell you where to look. As long as money is not locked in vaults and hands, there will be growth somewhere.
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