The Canada and U.S. trade dispute formally kicked off yesterday, and it already seems like relief could be on its way…

…the circus continues.

Rather than playing an active role in it, we spent yesterday digging through historical precedents, transcripts, and market data to give you a framework for navigating the uncertain path ahead.

We hope this guide can serve as a sanity check from the shock and awe you’ll inevitably find in every corner of the internet. Something you can return to as time goes on - and if you get enough value from it, something you’ll share with colleagues and friends!

Today, we think we’re in phase 1: volatility & uncertainty

This phase is underscored by volatile market conditions and business uncertainty, stemming from the lack of a clear, unified message from country/provincial leadership.

Businesses pull forward imports to brace for impact…

…and markets start to pick winners and losers, resulting in heightened volatility and trading activity - a tailwind for banks and exchange operators like TMX Group (X).

If we reach a resolution during this phase, watch for the names we previously highlighted as exposed to steel & aluminum tariffs to reverse their underperformance.

If not, we’d enter phase 2: adjustment & strategy shifts

The start of this phase is the moment where governments, companies, and markets collectively say “this is real”.

A mile marker for phase 2 could be a rapid deceleration of U.S. exports, like we saw in 2018.

A pickup in job loss driven by pressure on corporate earnings would be another, with the unemployment rate jumping ~50 bps for every 5% of the 2.4M Canadian workers tied to U.S. exports that get laid off.

These impacts would be met with policy support, likely in the form of rate cuts and fiscal stimulus, with some analysts suggesting Canada has $200B it could deploy if necessary.

In markets, we’d expect less volatility during this phase, and would favour duration exposure until a resolution is reached (long-term bonds, utilities and telecom equities, etc.).

If we don’t get one, we’d enter phase 3: resolution or entrenchment

In our view, the fork in the road moment is the upcoming USMCA renegotiation, slated for 2026. If the Trump administration keeps applying pressure, we could see the timeline on this get moved up.

If it comes to this point, the market reaction to the outcome would likely be binary.

If the above link won’t work, try this: https://www.bullpen.finance/content/51

Natural gas prices jumped yesterday due to higher heating demand from a cold snap spreading across the U.S. We also got some tough talk from Doug Ford, who threatened to cut off power exports in response to tariffs.

We did some work on this in January, highlighting that it could become more topical as trade tensions heat up.

Pet Valu (PET) was up big yesterday on the back of strong results, beating top and bottom-line estimates. The company is guiding for revenue of $1.17-1.20B and $254-260M in EBITDA for 2025, supported by ~40 new stores and 1-4% same-store sales growth. Importantly, they feel they have any potential tariff impacts under control, with most of its supply sourced domestically already.

Wajax (WJX) was down bigger after it’s earnings results where it inched above the street’s revenue estimates but missed huge on profit, with a 420 bps decline in margins Y/Y. The outlook wasn’t inspiring, with management citing broad market weakness due to tariff uncertainty.

Flagging the Docebo (DCBO) buy as the stock has struggled, down 25% over the past two weeks. Warburg is a growth equity shop who now owns ~12% of the equity - if you’re a shareholder, make sure you’re monitoring this one.

First National Financial (FN) capitalized on a late-year surge: