EWC Slips as Trump Announces New Tariffs on Canada

The iShares MSCI Canada ETF (EWC) dipped modestly on Friday after President Donald Trump announced plans to raise tariffs on Canadian imports to 35% starting August 1.

“As you will recall, the United States imposed Tariffs on Canada to deal with our Nation’s Fentanyl crisis, which is caused, in part, by Canada’s failure to stop the drugs from pouring into our Country. Instead of working with the United States, Canada retaliated with its own Tariffs,” Trump wrote in a letter posted to Truth Social.

He added, “Also, I must mention that the flow of Fentanyl is hardly the only challenge we have with Canada, which has many Tariff, Non-Tariff, Policies and Trade Barriers, which cause unsustainable Trade Deficits against the United States.”

The tariff announcement echoed a similar move earlier this year, when Trump surprised markets with sweeping duties on Canada and Mexico, two of America’s largest trading partners.

Still, the headline 35% number may be misleading. While some Canadian exports currently face a 25% tariff, many are exempt under the United States-Mexico-Canada Agreement (USMCA), which sets rules of origin and other criteria for duty-free trade. As of now, nearly 60% of Canada’s exports to the U.S. meet those requirements and are shielded from the tariffs.

EWC Shrugs Off Announcement

That may explain the muted market reaction. EWC was trading down by just 0.5% midday Friday, roughly in line with the 0.3% decline for the Vanguard S&P 500 ETF (VOO).

Year to date, however, EWC has gained 15.4%, more than double the 7.3% return for VOO.

The Canadian ETF has $3.1 billion in assets under management and has seen $138 million of inflows this year. Top holdings include the Royal Bank of Canada, Shopify and Toronto Dominion.