The latest economic data out of Canada shows that U.S. President Donald Trump’s trade tariffs are having an immediate and negative impact on the nation’s economy.
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An advance reading of gross domestic product (GDP), a measure of the goods and services produced in the country, shows that there was no economic growth during February, suggesting that the Canadian economy might have hit a wall as Trump imposed tariffs of up to 25% on multiple imports.
The stagnant growth in February comes after Canada’s GDP grew 0.4% in January, building on a 0.3% advance in December of last year. Economists and analysts were quick to blame the ongoing trade issues and import tariffs imposed by the U.S. for the drop off in economic growth, with some saying that the threat of import duties has had a chilling effect on business and consumer spending in Canada.
Election Issue
News of the economic decline comes with Canada in the midst of a federal election campaign, with U.S. relations the top political issue, followed by the state of the domestic economy. On the campaign trail, politicians have criticized the U.S. tariffs and threats by President Trump to annex Canada.
Trump’s recent 25% tariff placed on all vehicles manufactured outside the U.S. is sure to hurt Canada’s manufacturing sector, where many automotive parts are made and then shipped to neighboring Detroit, Michigan. Following news of the latest auto tariff, Canadian Prime Minister Mark Carney said that the U.S. is no longer a “reliable partner” on trade.
News of the stagnant economic growth in February has the Toronto Stock Exchange, Canada’s main bourse, trading 1% lower. The index is flat on the year.
Is the iShares S&P/TSX 60 Index ETF a Buy?
The iShares S&P/TSX 60 Index (TSE:XIU), which tracks the 60 largest securities on the Toronto Stock Exchange, has a consensus Moderate Buy rating among 61 Wall Street analysts. That rating is based on 53 Buy, six Hold, and two Sell recommendations issued in the last three months. The average XIU price target of C$43.80 implies 15.86% upside from current levels.

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