Trade Alert: Fading Canada

Betting against five Canadian companies in tariff trouble--plus, a bonus nanocap bullish trade.

The Trump Tariffs Continue

As I’ve mentioned before, the $64 trillion question is whether Trump’s tariffs are intended to balance trade (in which case, they’re sticking around) or a negotiating tactic (in which case, they’ll be rolled back).

On Sunday, we got two more indications that they’re meant to balance trade. The first was in a WSJ op/ed by Treasury Secretary Bessent, in which he wrote, “Tariffs are an effective tool for balancing international commerce.” (counterpoint: today Bessent suggested there could be trade deals as soon as this week). The second was a new tariff announced by President Trump, a 100% tariff on foreign movies.

Angle On: Canada

One country where a lot of movies shown in America are at least partially filmed is Canada. Coincidentally, Portfolio Armor Substack subscriber Zach asked over the weekend if we would be placing more bearish trades on Canadian names, as the prosect that the tariffs mostly won’t be rolled back doesn’t seem priced in yet. I noted that one of our trucking-related names last week was Canadian,

And said I’d do some more research on other possible Canadian stocks we could bet against. I looked for names that met these three criteria:

1. Have shares traded in the U.S.

2. Have options traded on those shares.

3. Are likely to be materially negatively impacted by new U.S. tariffs.

And I came up with five:

Today, we have bearish trades on all of them. The maximum risk on all of these trades are losses of 100%, and the maximum upsides vary, but are more than 100%.

In addition, we have a bonus bullish trade on a nanocap stock, surfaced on our Market Watchers X list. This is an industrial in the cogeneration/HVAC/refrigeration sector that may be about to get its first datacenter client. That would get it more attention as a picks & shovels play on AI.

Details below.

Bearish Trade A