Canada’s merchandise trade deficit widened in August, reflecting global softness and tariff pressures on key exports. Markets, meanwhile, remain buoyed by strong earnings and renewed investor appetite for gold.
BNN Bloomberg spoke with Garnet Anderson, head of portfolio management at Tacita Capital, about how tariffs, inflation and shifting consumer trends are shaping portfolio strategy and where he sees longer-term value emerging.
Key Takeaways
- Canada’s trade deficit widened to $6.32 billion in August as exports fell to both the U.S. and global markets.
- Tariffs on metals, machinery and forestry products are pressuring Canada’s competitiveness.
- Inflation and higher borrowing costs continue to weigh on Canadian consumers despite resilient spending.
- Gold producers and royalty firms, including Barrick and Wheaton, have powered TSX gains in recent months.
- Investors are urged to review their portfolio exposure to gold as the trade’s momentum eventually cools.
Read the full transcript below:
ANDREW: Canada’s merchandise trade deficit widened in August to more than $6.3 billion, driven in part by a drop in exports not only to the U.S. but also to the rest of the world. Declining gold sales were part of it. We’re joined by Garnet Anderson, head of portfolio management at Tacita Capital. Great to see you.
GARNET: Good morning.
ANDREW: I know you probably don’t spend that much time on export and import numbers, but what’s your feeling about the economy right now?
GARNET: Well, they do feed into the economy. Goods exports are about $60 billion, services exports roughly $20 billion, so it’s a pretty significant part of the Canadian economy. Obviously, the relationship with the U.S. is key. There’s a visit going on today between our prime minister and the president, so we’ll see how that goes.
It was a wider number than consensus, and we did see a bit of a revision improvement from last month, which is positive. But at the end of the day, you’re seeing the effects of tariffs ripple through. There was concern earlier about whether the U.S. might put tariffs on gold bars, and that caused a lot of volatility. We saw the flows to the States change, and flows from Switzerland and South Africa as well.
Beyond that, forestry was down, metals were down — both linked to tariffs. Machinery exports to the U.S. were also weaker, which was a bit surprising given the industrial buildup there. We even saw a dip in nuclear fuel exports to Japan. It was a dynamic month for trade.
Now, it’s August data, and the challenge will be whether we get September numbers in time for the next Bank of Canada meeting. StatsCan uses U.S. border data to estimate trade with the States, so there’s always a bit of a lag. That puts more pressure on the Bank of Canada — do they move ahead with another quarter-point cut, or wait? It’s a bit foggy out there, and it’s clear that tariffs are starting to chip away at our competitiveness.
ANDREW: What’s your view on the Canadian economy more broadly? Are you avoiding companies that depend on a strong consumer?
GARNET: We’re mindful of that. But it’s interesting — when you look at foot traffic and other consumer discretionary data, those stocks have held up fairly well. Canadian consumers continue to spend for the most part. There are areas like Windsor that have been disproportionately affected, but overall, the economy has been more resilient than many expected in the spring.
That said, with unemployment around 7.1 or 7.2 per cent, there’s reason for concern. The Bank of Canada faces pressure not to ignore inflation, which remains somewhat stubborn but is trending in the right direction. Still, that can reverse quickly.
ANDREW: I’m looking at Canadian Tire. I always think that’s a good barometer for the Canadian consumer. The stock is still up about 13 per cent this year.
GARNET: Right. But contrast that with the TSX composite, which is up more than 20 per cent. Canadian Tire has lagged. If fewer people are selling and moving houses, there are fewer walls to fix or paint — so there’s some spillover from the housing slowdown. It’s partly a housing-related stock, but also somewhat defensive, similar to Loblaws.
ANDREW: Yes, interesting with Loblaws. The stock has come off its record highs, but not by much.
GARNET: No, not much. We all go to the grocery store and raise our eyebrows at prices. At some point, their ability to keep pushing through higher prices will be tested. But most grocers are really attacking their cost structures — more self-checkouts, automation, and so on. Still, higher prices have put Canadians on their back foot in terms of spending power.
ANDREW: I’m one of those people who’ll leave my stuff if there’s a line at the cash. They can add as many self-checkouts as they want.
GARNET: Absolutely. Retailers are facing price pressures. The latest Canadian PMI showed input costs still rising, which squeezes margins. But corporate earnings overall have been strong — supported by lower taxes, lower interest rates, and lower energy costs. Margins continue to improve, partly due to investment in technology and AI.
ANDREW: You have some ideas, including two gold stocks: Wheaton Precious Metals and Barrick Gold. Why those two in particular?
GARNET: Because they create balance. Bullion remains the best portfolio diversifier, but investors are excited about gold right now — you just showed a chart over US$4,000. Of the top 25 performers on the TSX composite, 20 are metals and mining companies, plus one from Sprott. Gold is up roughly 50 per cent, silver around 65 per cent, and gold equities more than 120 per cent.
So it’s been a huge run. We wouldn’t dump bullion exposure, but it can’t go up forever. For investors just getting in, we’d be cautious about jumping into juniors with single-mine exposure in politically unstable regions.
Barrick is a Canadian mainstay that’s been reshaping its portfolio — selling some assets, buying back shares, and focusing on top-tier projects. Wheaton, on the other hand, has a streaming and royalty model, locking in metals at fixed prices. Both have done well. Barrick has caught up over the past six months while Wheaton has plateaued. If gold pulls back five or six per cent, that could be a good long-term entry point for both.
ANDREW: Interesting. The BMO junior gold ETF, ZJG, is up 130 per cent this year.
GARNET: Exactly. That’s what’s driving the TSX. Before jumping in, Canadians should check what they already own — gold is nearly eight per cent of the TSX composite. If you’ve got momentum strategies, it’s probably already in your portfolio. In the U.S., it’s all about AI; here, it’s all about gold. Just be aware of your exposure before you leap.
ANDREW: Garnet, thanks very much.
GARNET: Thank you.
ANDREW: Garnet Anderson, head of portfolio management at Tacita Capital.
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This BNN Bloomberg summary and transcript of the Oct. 7, 2025 interview with Garnet Anderson are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
