Canada Faces Rising Inflation, Slowing Growth Risks As Trump's Tariffs Loom: One ETF Can Turn This Crisis Into Opportunity

With the Organization for Economic Co-operation and Development (OECD) reducing its growth forecasts for Canada and sounding a warning bell on inflationary risks, investors can’t help but be cautious.

But amidst the chaos, there are silver linings.

Some Canadian ETFs may be poised to ride out the storm and even gain from the changing economic landscape. But there is one U.S.-listed ETF with Canadian market exposure that may turn the bane of tariff woes into a boon.

A Safe Haven In Market Uncertainty

The iShares MSCI Canada ETF EWC offers broad exposure to the Canadian equity market, following the MSCI Canada Index. Although tariffs and trade barriers may temper growth, Canada’s strong financial and energy sectors—two of the largest holdings of EWC—may provide a cushion.

Why? Historically, the banking sector has performed well in higher-interest-rate environments, and inflationary pressures may keep rates high. Meanwhile, energy stocks, especially in oil and gas, tend to do well when inflation increases. Since Canada is a large energy exporter, any supply constraint created by tariffs might drive oil prices up, helping companies in this ETF.

In spite of fears of economic slowdown, Canadian equities have been resilient. The iShares MSCI Canada Index Fund added 1.1% on Monday in one session, an indication of confidence from investors. In the past year, price returns recorded by the fund was more than 6%.

President Donald Trump’s tariffs are placing another level of complexity on North America’s economic prospects. The OECD’s warnings point to the dangers that lie ahead. But ETFs targeting robust sectors like finance, energy, and diversified global equities might give investors hope even in turbulent times.

With ETFGI data showing Canada’s ETF market hitting record assets of $417.72 billion in February, investors are obviously placing their bets on long-term durability. For those who want to ride out the storm sitting in the U.S., EWC may be worth a look.

Read Next: