Bridgewater examines Canada's approach to U.S. trade protectionism

A negotiated settlement between Canada and the U.S. on tariff disputes or trade rules would likely ease volatility in cross-border supply chains and reduce currency pressure on the Canadian dollar, particularly benefiting automotive and agricultural exporters.

Continued policy stalemate without escalation or breakthrough would plausibly leave trade-sensitive sectors in a state of prolonged uncertainty, keeping hedging costs elevated and limiting sustained capital reallocation into Canadian equities or the currency.

Tit-for-tat tariff increases or retaliatory measures would put downward pressure on the Canadian dollar and equity valuations in energy, agriculture, and automotive, while raising input costs for manufacturers reliant on cross-border supply chains.