2 Stocks to Buy on U.S.-Canada Trade War Fears
Imagine the following scenario:
- A stock is trending higher, reaching multi-year highs or even all-time highs.
- Then, due to circumstances beyond the company’s control, the stock falls. There is nothing wrong with the company, or with its sector.
- The circumstances surrounding the stock’s decline may or may not be temporary.
In this case, the circumstances are the on-again, off-again trade dispute between the U.S. and Canada.
Is This a Temporary Trade Dispute?
On August 22, the U.S. enacted 50% tariffs on Canadian steel, autos, and other goods. Canada is responding in kind, imposing tariffs on 700 U.S. products on September 8.
How long will this trade war drag on? It’s impossible to say. When it comes to trade, the U.S. can be a tough negotiator, and this dispute is part of the negotiation process.
Today, we’re looking at two stocks with strong charts that have recently fallen due to the U.S. vs. Canada trade dispute.
Magna International
Magna International ($MGA) is one of the world’s largest automotive suppliers and mobility technology providers. Based in Aurora, Ontario, Magna International supplies U.S. automakers like Ford ($F), General Motors ($GM), and Tesla ($TSLA).
On August 21, shares of Magna International reached a four-year high. The next day, U.S. tariffs took effect after talks with Canada were terminated. Since then, the stock has fallen by nearly 10%, and dropped below its 50-day moving average (blue).
In late July, Magna reported a solid quarter, beating earnings and revenue expectations. The stock has a market capitalization of $17.5 billion, and a current dividend yield of about 3%.
Linamar Corp.
Another Canadian company that has taken a hit after U.S. tariffs were enacted is Linamar Corp. (LNR.TO) Guelph, Ontario-based Linamar manufactures engines and transmissions for automobiles, advanced parts for electric cars, as well as farming and medical equipment.
The Toronto-listed stock was trading at an all-time high on August 21, just prior to the enactment of U.S. tariffs. Since then, shares of Linamar have declined by about 10%.
When Linamar last reported in mid-August, the company came up just shy of earnings estimates. However, that news didn’t prevent the stock from subsequently reaching an all-time high.
Linamar has a market capitalization of about $5 billion, and a current dividend yield of 1.3%.
Risk Management
Both of the above stocks have fallen from multi-year highs to below their respective 50-day moving averages in one week’s time. While we’re looking for a bounce in both Magna and Linamar, we need an exit strategy if these stocks continue to fall.
In this case, both stocks are trading above their respective 200-day moving averages (red). In 2026, Magna hasn’t closed below that key indicator, while Linamar has only closed beneath it once. For these two stocks, a close below the 200-day MA should be considered a sell signal.
Bottom Line
We entered long positions in both Magna and Linamar on August 27. If there is a quick resolution to the U.S.-Canada trade dispute, we expect both names to bounce.
At the time of publication, Ponsi was long MGA and LNR.
