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Canadian businesses and investors alike should brace for a potentially rough market ride in the face of ongoing U.S. trade negotiations.

For example, recently imposed steel and aluminum tariffs on Canada could pose a headwind for steel stocks, says Katherine Judge, CIBC economist, in a weekly economics report.

“Capacity utilization in the production of steel is well below its long-run average in the U.S., something that will enable substitution towards American-made steel at the expense of Canada,” says Judge. “That could weigh on steel companies listed on the TSX.”

Read: Why a bad NAFTA deal is better than no deal at all

On a brighter note, Canadian equities could get some help in the months ahead, she says.

Unlike U.S. stocks, Canadian stocks won’t benefit from tax reform, but “higher energy prices should support more robust cash flow for Canadian oil producers,” she says. Financials should also fare well, as banks seem to be weathering the storm from tighter lending standards reasonably well, she adds.

Read: Causes and effects of Canada’s lower growth

Tech to benefit from trade tariffs?

Meanwhile, S&P 500 tech shares are up double digits this year.

Read: Why Canadian investors need more technology exposure

“While most sectors are struggling to break even this year amid growing risks of a disruptive trade war, technology shares just keep motoring higher,” says Sal Guatieri, BMO senior economist, in a weekly economics report.

The strong performance reflects U.S. earnings growth for the sector and AI expectations, he says, as well as labour shortages.

Further, tech companies could benefit from trade woes.

“As tariffs spread to more foreign products, business costs will go up, forcing more companies to automate to lift productivity and stay competitive,” says Guatieri. “This implies robust demand for high-tech gear and software.”

All bets are off if the trade war goes full-scale, however. In that case, “the disruptive impact on the economy would dominate, dragging down demand for IT gear,” says Guatieri.

Read the full reports from CIBC and BMO.

Also read:

Why a bad NAFTA deal is better than no deal at all

Regulators talk tech, with tips for dealers