BMO stays bullish on Canadian stocks amid Trump’s ‘full-blown blizzard of uncertainty’

Economists say the Canadian economy is poised to plunge into a recession this year if U.S. tariffs that took effect Tuesday morning remain in place. President Donald Trump speaks in the Roosevelt Room of the White House in Washington, Monday, March 3, 2025. THE CANADIAN PRESS/AP-Pool via AP — U.S. President Donald Trump speaks in the Roosevelt Room of the White House in Washington, Monday, March 3, 2025. (THE CANADIAN PRESS/AP-Pool via AP) · Associated Press

Bank of Montreal’s consistently bullish chief investment strategist isn’t blinking as U.S. President Donald Trump’s tariff offensive on Canada creates a “full-blown blizzard of uncertainty” for TSX-listed stocks.

Brian Belski of BMO Capital Markets is sticking to his call for the S&P/TSX Composite index (^GSPTSE) to hit 28,500 by the end of 2025.

Trump’s 25 per cent across-the-board tariffs on Canadian imports, with a lower 10 per cent levy on energy and potash, briefly went into effect last week before the White House announced a pause for some goods until next month. A separate 25 per cent tariff on U.S. imports of Canadian steel and aluminum is due to kick in on Wednesday.

Canada’s retaliatory response has touched a nerve with Trump. On Tuesday, the president announced his steel and aluminum tariffs will double in response to an Ontario surcharge on electricity sold to the U.S.

Ontario Premier Doug Ford agreed to suspend the surcharge on Tuesday afternoon, after Trump took to social media saying Canadians “will pay a financial price for this so big that it will be read about in History Books for many years to come.”

“Fear of the unknown causes strife, and Canada is chock full of strife right now,” Belski wrote in a recent note to clients.

“NO ONE KNOWS,” he added. “Humility is the better tactic, from our lens. So, let’s deal with what we know. We see NO material change in forward fundamentals in terms of our Canadian models. As such, we are not changing our 2025 $1,600 [earnings per share] target for the TSX. YES, we continue to believe Canadian equities will hit new all-time highs by year-end, and [we] are maintaining our 28,500 year-end price target.”

Uncertainty tied to the ongoing rift between Canada and its largest trading partner has been a consistent theme for large Canadian companies reporting fourth-quarter earnings. Executives in some sectors, like oil and gas, have largely downplayed the impact. Leaders in other industries, like auto parts, are less optimistic. Last week, Linamar (LNR.TO) executive chair Linda Hasenfratz said adding steel and aluminum to auto tariffs would cost carmakers billions of dollars and is “likely to shut the industry down.”

“Fear is a powerful emotion and uncertainty is the ice that is freezing Canadian investors. However, there are always opportunities, after all, Canada has some of the best companies with the best products and services in the world,” Belski wrote.

“As such, we believe investors should be looking for opportunities over the next several months for companies that are being unfairly punished.”

Belski screened TSX-listed stocks for companies with market capitalizations larger than $4 billion with declining earnings multiples in 2025, despite a strong growth profile and an improving outlook year-to-date.