3 Stocks That Win If the US-Canada Tariff Pause Becomes a Deal

3 Stocks That Win If the US-Canada Tariff Pause Becomes a Deal

Trey Thoelcke

Thu, August 20, 2026 at 3:40 PM GMT+3 5 min read

Quick Read

• Magna (MGA) and Canadian Pacific (CP) gain most directly, as lower auto tariffs cut MGA's cross-border input costs and lift CP's suppressed rail volumes.

• Constellation (STZ) gains from the deal's alcohol provision, trading 19% below year-ago levels with shares well under the $171 analyst consensus target.

• Nothing is signed, and if paperwork stalls, the full 50% tariffs snap back, rerating all three stocks on the same negative headline.

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Late Tuesday night, President Trump announced a three-day pause on new 50% U.S. tariffs that were scheduled to take effect at 12:01 a.m. ET Wednesday, saying a deal had been reached "subject to the finalization of documents." The measures would have hit roughly $20 billion of Canadian goods, including wine and hockey sticks. The White House proclamation is framed around Canadian discrimination regarding alcoholic beverages, dairy, and motor vehicles. Nothing is signed. Prime Minister Mark Carney said, "Substantial progress has been made, although there is important work still to be done." Below are three U.S.-listed names that could benefit if the pause hardens into a durable agreement, per reporting from CNBC.

Magna International

Magna International (NYSE:MGA) is the cleanest read on the auto piece of the proclamation. The Aurora, Ontario-based auto parts supplier ships components that can cross the border multiple times before a finished vehicle rolls off the line. So lower auto tariffs plus removal of Canadian counter-measures directly cut input cost friction for its OEM customers. Trump signaled the deal might include lowering U.S. tariffs on Canadian-made autos and on Canadian steel and aluminum. He said, "we may bring some of the tariffs down to a level where other countries are."

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The setup is coming off a strong quarter. Magna posted Q2 FY26 sales of $11 billion, adjusted EBIT of $677 million (up 16%), and adjusted EPS of $1.86, up 29%. Free cash flow of $617 million was more than double last year. Management guided FY26 adjusted EPS to $6.70 to $7.30 and said its outlook still bakes in a net tariff headwind such that "a full year 2026 will be similar to 2025." Any tariff relief would be pure upside to that plan.

Shares closed at $71.01 on August 19, 2026, up 32.4% year to date and 59.7% over the past year. Magna is trading close to a 52-week peak, raising the stakes for tariff negotiations. The analyst target of $73.39 and forward P/E of 10x leave room for re-rating, though earnings still track North American vehicle production, and a deal does not fix soft demand.

Constellation Brands

Constellation Brands (NYSE:STZ) is the export-side play. Its beer portfolio is imported from Mexico, but its Canadian exposure runs through provincial liquor board treatment of U.S. wine and spirits and Canadian retaliatory tariffs. "Alcoholic beverages" is the first named category in the proclamation, and Trump said Canada agreed to lower its retaliatory tariffs on U.S. goods. A deal that removes those barriers restores shelf access for U.S. alcohol producers.

Q1 FY27 comparable EPS came in at $3.43, with beer holding up (Pacifico, Victoria, Modelo Chelada all growing double digits or better). FY27 guidance is cautious, citing a shifting macroeconomic backdrop and softening consumer demand. The $170.83 consensus target is well above the current price of $133.52, as of August 19, 2026. Constellation is the laggard of the group. Shares are down 3.2% year to date and 19.2% over the past year, trading at a forward P/E near 11. Aluminum can input costs remain the other trade lever worth tracking.

Canadian Pacific Kansas City

Canadian Pacific Kansas City (NYSE:CP) is the volume proxy. It runs the only single-line rail network connecting Canada, the U.S., and Mexico. CEO Keith Creel said customers "continue to look for ways to simplify supply chains, reduce friction at borders, increase resiliency, and improve transit performance." Tariffs suppress the flow of autos, grain, lumber, chemicals, and intermodal traffic that fill those trains.

Q2 FY26 delivered volume growth of 4%, revenue growth of 13%, and adjusted diluted EPS of $1.27 (up 13%). Automotive revenue rose 19%. CFO commentary flagged the Mexico-Canada land bridge at $100 million in 2023, expected to reach $600 million by the end of 2026, and on a path to reach $1 billion. Shares closed at $94.44 on August 19, 2026, up 27.1% year to date, versus an analyst target of $101.73. The catch is that rail volumes lag policy by quarters, so relief shows up in carloads down the road.

What to Watch as Documents Get Papered

Investors should track three things:

• Whether the pause is extended before it lapses

• The specific tariff lines that come out of the final text (autos, aluminum, alcohol)

• Whether Canadian retaliatory measures fall in parallel

U.S. Trade Representative Jamieson Greer said the administration is "confident that we've reached an agreement," but if the paperwork stalls, the 50% tariffs can snap back, and Magna, Constellation, and CPKC would all re-rate off the same headline.

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