BMO (TSX:BMO) Capital Markets released a statement maintaining its consistent view on US/Canada trade concerns since its December publication.
BMO suggests that the tariff threats were an initial strategy in the renegotiation of the United States-Mexico-Canada Agreement (USMCA), which President Trump had pledged to revisit. The firm believes that these threats served to provoke a reaction and to disclose key information about the renegotiation process.
While BMO considers a 25% broad tariff on the United States' two largest trading partners highly improbable at this stage, it does not dismiss the possibility of some targeted tariffs being introduced in the coming months unless Canada makes significant concessions.
However, BMO's analysts remain optimistic, predicting that common sense will prevail, leading to a renegotiated USMCA with minimal impact on Canadian equities.
According to BMO, investors should focus on what they can control and pay attention to the ongoing normalization process that is expected to continue into 2025. The firm's stance is that Canadian economic growth is closely linked to that of the US and will likely converge with it by 2025. This perspective has remained unchanged despite potential trade-related volatility.
BMO further suggests that the relative strength and improved growth outlook of the Toronto Stock Exchange (TSX) positions Canada to potentially outperform in 2025. This positive outlook is held despite the ongoing uncertainty surrounding trade discussions. B
MO encourages investors to concentrate on the aspects within their control and to look towards the future convergence of Canadian and US economic growth.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.