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One Canadian stock that could actually benefit from Trump's tariffs

Commercial fishing boats are docked along the waterway in Sneads Ferry, N.C. Friday March 23, 2018. (Ken Blevins /The Star-News via AP)

In the wake of Trump’s sweeping protectionist tariffs, some investors are looking to Nova Scotia’s Clearwater Seafood (CLR.TO) as way to brace for the potential upcoming trade wars.

Some say Clearwater’s stock is one to benefit from the trade rift between the United States and China. The company reportedly sells its products in more than 40 countries, including China. Media reports say that the country makes up 35 per cent of the world’s seafood market. 

Clearwater has remained bullish on China despite the tariffs, telling investors in a conference call Wednesday that they are currently seeing robust growth in the market.

“There really isn’t any risk on our radar relative to U.S.-Canada tariffs and China-U.S. tariffs,” a Clearwater representative said.

“You can’t speculate on how U.S. suppliers and Chinese suppliers will react to those tariffs. Just about every species of seafood is growing in the China market, and demand appears to be unstoppable.”

However, not all Canadian seafood companies are expected to avoid the tariffs placed by the U.S. on China. BMO Nesbitt Burns analyst Jonathan Lamers says that its competitor High Liner (HLF.TO) has already found itself in the crosshairs as it could possibly face $24 million in tariffs.

IntraFish reports that China is the main source for many of High Liner’s imports. Clearwater, however, sources its products from Canada, the U.K. and Argentina.

High Liner has already suffered a rough 2017 with the closure of a plant in New Bedford the year before, a product recall and a change in leadership. Its sales were also below target for that year.

Clearwater has also weathered its own storms and is on watch for some bumpy waters ahead.

Its 2018 second quarter report said that it anticipated it would lose 30 per cent of its quota in the clam fishery due to a ministry decision to expropriate 25 per cent of the quota from the company without compensation all while announcing a modest quota reduction.

It has also faced challenges with total allowable catch changes and reductions as well as the limited seafood supply that the company says is below the demand.

That’s while dealing with the seasonality of the seafood business, which tends to also have an impact on the company’s bottom line.

Clearwater reported that its sales were down slightly year over year to $148.1 million in the second quarter, compared to $154.3 million. The board of directors approved a dividend payout of $0.05 per share to stockholders, to take place on September 4.

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