Posthaste: Forget tariffs, here's how Trump is really making money off Canada
Donald Trump ‘s campaign to make America great again through tariffs took a major blow Friday when the Supreme Court ruled that he lacked authority to impose the levies under the International Emergency Economic Powers Act (IEEPA).
The ruling invalidates an estimated US$130-$160 billion in tariff revenues , but Trump was back at it the very next day, pledging a new worldwide tariff of 15 per cent, using different legislation.
Almost all Canadian exports covered by the IEEPA tariffs were exempt anyway under the Canada-United-States-Mexico Agreement (CUSMA) , but it’s some comfort to know that if the trade deal were to collapse those levies would no longer be a threat.
Avery Shenfeld, chief economist for CIBC Capital Markets, said it might be good to remind the U.S. president when CUSMA comes under review this year of “Canada’s ‘big win’ for Trump.”
Trump recently trumpeted the US$36-billion investment by Japanese companies in the United States, including an oil export facility in Texas, an industrial diamonds plant in Georgia and a natural gas power plant in Ohio, claiming a victory for his tariff trade policy.
“If that’s the President’s view, then Canada has a lot to crow about in upcoming trade talks, based on what it’s already been doing in the U.S. for a long time,” said Shenfeld.
Canadian entities added an average of $60 billion a year to their foreign direct investment holdings in the U.S. in the four years to 2024.
This puts Canadian investment in the U.S. near the top on the global stage and far above the allocations of many larger economies.
The flows into the United States have also consistently exceeded U.S. entities’ direct investment in Canada, he said.
Part of the reason for this is Canada’s large pension funds have expanded their direct investment activities in recent years to diversify from their home market.
“The reality is that, as long as Canada still has an overall trade and current account surplus with the U.S., Americans will be running a financial and capital account surplus with Canada, receiving more in investment flows of all types than it sends northbound,” said Shenfeld.
“Perhaps we can remind the President of that big win in upcoming talks over Canada-U.S.-Mexico trade, and let him tweet away about it.”
Canadian demand has also boosted U.S. stock values and by extension American wealth, said Warren Lovely, an economist with National Bank of Canada.
The $84-billion net investment by Canadians in U.S. equities in 2025 was second highest annual tally, only exceeded by 2021’s total of $95 billion.
The amount flowing into the United States far exceeds the $10 billion that went to non-U.S. equities.
“The next time a self-righteous Canuck brags about shunning American products in favour of home-made alternatives, ask to see their latest portfolio statement,” said Lovely. “It’s apt to have plenty of U.S. equity exposure.”
But in this case trade actually is a two-way street, with Americans snapping up record levels of Canadian debt.
Governments in Canada facing operational deficits and big plans to boost infrastructure investment are issuing more debt, as are public sector entities and Canadian banks and non-financial corporations, said Lovely.
“Rather than swamp domestic investors, Canadian issuers have (time and again) sold their securities abroad. Last year, no country heeded Canada’s call more than the United States.”
America remains the biggest investor by far in Canadian debt, holding 45 per cent or $1.1 trillion as of December, 2025. The $132 billion bought by U.S. investors in 2025 was a record tally.
“Call this an example of two nations each giving each other something they can use. Mutually beneficial; we might wish to keep things that way,” said Lovely.
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You can’t keep a good shopper down.
After slumping in the fourth quarter, Canadian retail sales are set to rebound in the new year. Statistics Canada released an advanced number Friday that estimated sales jumped 1.5 per cent in January, after dropping 0.4 per cent in December.
Even in the face of U.S. tariffs, economic uncertainty and the rising cost of living, Canadians continued to shop in 2025. Retail sales for the year were up 4 per cent, compared with 1.6 per cent the year before.
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Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.
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