Canada Can't Wait: Navigating Trump’s Third-Term Policy Risks and Investment Opportunities

The political chess match between Canada and the United States under President Donald Trump’s potential third term has entered a critical phase. Ex-Liberal Party leaders, including former Prime Minister Justin Trudeau and British Columbia’s John Horgan, have warned that Canada cannot afford to “wait out” Trump’s aggressive policies, which threaten trade, energy, and environmental cooperation. With Trump’s administration advancing executive orders targeting immigration, fossil fuels, and protectionist trade measures, Canadian investors face a landscape of heightened uncertainty—and opportunity.

Trade Tensions: A Double-Edged Sword

Trump’s 2025 agenda has sharpened its focus on trade reciprocity. Executive Order 14257, which imposes tariffs on imports from countries contributing to U.S. trade deficits—particularly China—has already drawn criticism from Canadian businesses reliant on cross-border supply chains. Ex-Liberal leaders, such as former foreign affairs minister Bill Graham, caution that Trump’s “transactional approach” could reignite disputes over softwood lumber and dairy exports.

For instance, softwood lumber exports to the U.S. represent $8 billion annually for Canada. Canfor, a major producer, saw its stock drop 18% in early 2025 amid fears of new tariffs. Meanwhile, dairy farmers face potential retaliation if Trump follows through on threats to block Canadian dairy under the USMCA.

However, the ex-Liberals also note areas of potential alignment. Former MP Irwin Cotler emphasizes opportunities in critical minerals, such as lithium and cobalt, which are vital for electric vehicles. Canada holds significant reserves of these resources, and U.S. demand for domestic supply chains could boost investments in companies like First Quantum Minerals (TSX: FM) or Critical Elements Corp (TSX-V: CRE).

Energy and Climate: A Collision of Agendas

Trump’s push to revive coal and oil production clashes with Canada’s climate goals. His executive orders, including EO 14261 (reviving coal) and EO 14241 (preempting state climate policies), directly oppose Canada’s net-zero commitments. John Horgan warns that fossil fuel infrastructure investments—such as pipelines to serve U.S. markets—could become stranded assets if global climate policies shift faster than Trump’s agenda.

Canadian oil sands producers like Suncor Energy (TSX: SU) have seen their stock prices halve since 2022, reflecting investor skepticism about long-term viability. Conversely, renewable energy firms like Canadian Solar (NASDAQ: CSIQ) or Hydro-Québec (TSX: HQC) could benefit from cross-border demand for clean energy if Trump’s policies fail to derail global trends.

Legal and Policy Uncertainty: A New Frontier

Trump’s executive overreach—such as his attempt to end birthright citizenship—has triggered lawsuits and judicial pushback. A federal judge’s restraining order against the citizenship policy, and the arrest of Wisconsin Judge Hannah Dugan for resisting immigration orders, highlight escalating tensions between the executive and judicial branches. For Canadian investors, this legal instability could impact sectors reliant on U.S. regulatory certainty, such as pharmaceuticals or tech.

Canadian markets have shown higher volatility than their U.S. counterparts this year, reflecting concerns over cross-border policy clashes. The Toronto Stock Exchange’s energy and materials sectors, heavily tied to U.S. demand, have underperformed the broader market.

Where to Invest Amid the Storm

Despite the risks, Canada’s economy retains structural strengths. Key sectors to watch:

1. Critical Minerals:
2. First Quantum Minerals (TSX: FM): A leader in cobalt and copper, essential for EV batteries.

3. Northern Star Minerals (TSX-V: NST): Exploiting lithium reserves in Ontario.

4. Cybersecurity and Tech:

5. Cerberus Cyber Security (TSX-V: CCS): Aligns with U.S. demand for infrastructure protection.

6. Defensive Sectors:

7. Brookfield Asset Management (TSX: BAM.A): Diversified investments in infrastructure and real estate.
8. Bank of Montreal (TSX: BMO): Stable financial services amid economic uncertainty.

Conclusion: Navigating the Crossroads with Data

Ex-Liberal warnings underscore a clear message: Canada cannot isolate itself from U.S. policy shifts. Investors should focus on sectors insulated from trade volatility while capitalizing on shared interests.

• Trade-sensitive stocks (e.g., Canfor) face downside risks unless bilateral talks de-escalate.
• Critical minerals and renewables offer long-term resilience, backed by global decarbonization trends.
• Legal battles over executive overreach could reduce uncertainty by 2026, but investors should prepare for prolonged volatility.

The data shows that Canada’s strategic resources and geographic proximity to the U.S. remain its strongest assets. Investors who prioritize sectors aligned with global trends—and avoid those at the mercy of Trump’s tariffs—will position themselves to thrive, even as the political storm rages.

As ex-Liberal leaders caution, Canada’s survival strategy isn’t to wait out Trump, but to navigate his policies with agility, leveraging its strengths while hedging against the unpredictable.