Three Provinces to Take the Brunt of the Trade War: iShares S&P / TSX 60 Index ETF Stock (TSE:XIU) Notches Up Regardless

The trade war between the United States and Canada is in full swing. The effects will, naturally, not be felt to the same degree everywhere. In fact, the latest reports say that three provinces in particular are especially likely to take it on the chin: Ontario, Manitoba, and Quebec. Despite this, the iShares S&P / TSX 60 Index fund (TSE:XIU) actually managed to gain fractionally in Thursday morning’s trading.

This conclusion actually makes some sense, based on studies from several economists. Alberta is largely insulated from the trade war as it is an energy producer, and it certainly does not hurt that the Trump administration is courting it to become a state, or at least, a separate country. Saskatchewan is in a similar boat, with some believing that it will largely go as Alberta goes. The opening of the Trans Mountain pipeline will also provide new markets and further insulate the region.

But for the central part of Canada, with a focus on heavy manufacturing and the like, the tariffs will likely hit here especially hard. One of the biggest problems will be for the automotive sector, which will be hit with the “double whammy” effect of mounting tariffs and a shift to electric vehicles. Given the market for electric vehicles these days, that may be a particular hit. One economist, Desjardins Group’s Laura Gu, noted that Ontario might hit technical recession by the end of the second quarter.

Whose Side Are You On, Anyway?

And that is leading to an unexpected condition in Canada: a growing number of Canadians who believe their southern neighbor is now an enemy of the state. Around a third of respondents in a recent poll believed the United States was a neutral country, while 27% declared it an ally as it has long been. But 26% now consider the United States Canada’s enemy.

About 30% of women called the United States an enemy of Canada, and around 22% of men did likewise. But it was overwhelmingly the old folks—anyone over 55—who believed the United States had it out for Canada, and those in Ontario and British Columbia thought likewise.

Is the iShares S&P / TSX 60 Index ETF a Good Buy Right Now?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on TSE:XIU shares based on 51 Buys, nine Holds and one Sells assigned in the past three months, as indicated by the graphic below. After a 18.82% rally in its share price over the past year, the average TSE:XIU price target of $43.49 per share implies 9.44% upside potential.

See more TSE:XIU analyst ratings

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