Majority of Canadians worry about future of U.S. relationship, poll finds

A new Angus Reid Institute poll finds 79% of Canadians are more fearful than hopeful about the year ahead amid a U.S. trade war initiated in 2025 via tariffs on goods outside the free-trade deal, and widespread concern over President Trump’s first-year conduct (66% grade him an F). The survey highlights elevated political risk to Canada–U.S. trade relations and the energy sector—47% of respondents (58% in Alberta) view the ouster of Venezuela’s Maduro as negative for Canada’s oil and gas industry and 74% expect further regime changes under the Trump administration. The data suggest heightened investor and public attention (61% followed more U.S. news), potential policy-driven downside for Canadian exporters and energy assets, and partisan divergence in perceptions that could shape domestic political responses.

Analysis

Market structure: A sustained U.S.–Canada trade spat (tariffs on non‑USMCA goods) shifts pricing power toward U.S. domestic producers and import substitutes while compressing margins for Canadian exporters (materials, industrials, autos, agri). Expect CAD weakness of 3–8% versus USD if tariffs and political rhetoric persist for quarters; Canadian equities (EWC) should underperform U.S. large caps on a 3–12 month horizon as risk premia widen.

Risk assessment: Tail risks include sudden escalation (full broad-based tariffs or asset restrictions) leading to supply‑chain interruption and a Canadian recession (GDP hit >1–2% annualized): low probability but high impact for Canadian banks and provincial credits. Short term (days–weeks) watch headline volatility around tariff implementation and Davos/Twitter exchanges; medium term (3–12 months) corporate earnings will reveal margin pass‑through; long term (1–3 years) structural reshoring could permanently reallocate supply chains.

Trade implications: Direct plays include short Canadian equity/FX exposure and hedged long U.S. export/tech exposure; commodities bifurcate — oil producers could face two‑way risk (higher geopolitical premium vs weaker CAD demand for heavy crude). Use options to buy downside protection on EWC/CNQ and volatility plays on USDCAD; shift portfolio weight from Canada‑centric resource names into U.S. defensives/tech for 3–12 months.

Contrarian angle: Consensus may overstate permanent decoupling — narrow, targeted tariffs could be transitory and create value in beaten‑down Canadian dividend names (Suncor, CNQ) if oil rallies or tariffs are rolled back. A tactical long in Canadian energy (select names) financed by short EWC beta could profit from mean reversion if CAD stabilizes within 6–9 months.

Key Decisions for Investors

• Establish a 2–3% portfolio short in EWC (iShares MSCI Canada ETF) via futures or a 3‑month put calendar, targeting 8–12% downside; exit or hedge if EWC rallies >5% from entry or if USDCAD falls >3% within 30 days.
• Initiate a long USDCAD position equivalent to 1–2% portfolio (FX forwards or spot) with stop-loss at +10% adverse move and target 3–8% appreciation over 3–9 months; scale in after any tariff announcement windows (next 30–90 days).
• Pair trade: long SPY (2%) and short EWC (1.5%) sized to be delta‑neutral to US market beta, hold 3–12 months to capture relative outperformance if Canadian risk premium widens; rebalance on quarterly earnings or tariff milestones.
• Options hedge: buy 3‑month 10% OTM puts on CNQ (Canadian Natural) or SU (Suncor) for 0.5–1% portfolio protection if you hold Canadian energy, and sell 6–9 month covered calls on the same names to monetize elevated IV if oil price >$85/bbl or if implied vol drops >20% post‑event.
• Reduce cyclical Canada‑export exposure (materials, industrials) by 20–30% over next 30 days and redeploy into U.S. tech/consumer staples ETFs (QQQ, XLP) for 3–12 months; revisit if tariff announcements are reversed or CAD recovers >4%.