Long-term outlook: 

Bull Case for Japan, Canada, and Israel in a Post-Tariff World, during a US-centred disinflation + rate cuts

$iShares MSCI Japan ETF(EWJ)$  

$iShares MSCI Canada ETF(EWC)$ 

$iShares MSCI Israel ETF(EIS)$  

If the U.S. were to enact steep tariffs—10-20% for most countries and 60% for China—it would radically reshape global trade dynamics, creating a unique bull case for markets in Japan, Canada, and Israel. Here’s why these countries could benefit the most:

Japan 🇯🇵

With high tariffs on China, Japan would become an attractive alternative supplier for the U.S. and global markets, especially in tech, automotive, and industrial goods. Japan's large exporters, such as those in the Nikkei 225, would likely see a boost from new demand as companies seek non-Chinese sources. Additionally, a weaker yen, combined with Japan's solid infrastructure and global supply chains, would enhance competitiveness and profitability for Japanese exporters.

Canada 🇨🇦

As the U.S. looks to reduce dependency on China, Canada's proximity, trade agreements, and strong manufacturing and energy sectors position it well to capture more North American demand. The TSX Composite Index could gain, with manufacturing and resource sectors leading the way. Lower inflation rates would also keep costs manageable for Canadian companies, boosting margins and investment appeal. Energy and mining, critical sectors for Canada, could benefit if U.S. demand stabilizes commodity prices.

Israel 🇮🇱

Israel's robust tech sector is well-placed to fill any gaps left by China in the U.S. market. Israeli companies in sectors like cybersecurity, biotech, and electronics, largely represented in the TA-35 Index, stand to gain as the U.S. and other countries look to them as innovative, reliable partners. Israel’s close economic ties with the U.S., combined with a skilled workforce, give it an edge in securing new trade relationships and R&D investments.

Key Takeaway:

Japan, Canada, and Israel are uniquely positioned to benefit from a rebalanced trade landscape. With strong sectoral alignments and close ties to the U.S., these markets could see increased demand, capital inflows, and robust growth—fueling a compelling bull case for investors.

$iShares MSCI Japan ETF(EWJ)$