Trump’s Trade War with Canada: QE on the Horizon? August 25, 2026

— Ben, Find Better Trades

Can you believe this? Trump just opened a new trade front with Canada. Markets are going to lose their minds today. This immediately shifts the conversation from rate hikes to potential quantitative easing.

What Just Happened

President Trump just announced new tariffs on a slew of Canadian imports. This isn’t a threat; it’s an immediate, aggressive trade war move against a key trading partner.

The market didn’t price in this level of escalation. Everyone expected political posturing, not a full-blown economic punch that targets one of our closest allies.

This trade war will hurt U.S. economic growth, plain and simple. It disrupts supply chains and raises costs for businesses and consumers. That economic pressure could force the Federal Reserve to consider another round of quantitative easing to stimulate the economy.

What It Means for Your Trades

Gold is the immediate winner here. Quantitative easing means more money printing, a weaker dollar, and inflation concerns. Gold loves that environment.

Look at physical gold or GLD. This isn’t a maybe; it’s a direct catalyst for higher prices, especially as real yields drop.

Long bonds also get a bid. If the Fed starts buying bonds again, their prices will jump, and yields will fall. TLT is your play for long-dated Treasuries; it’s a classic QE beneficiary.

Stocks will see immediate volatility from trade war fears. Supply chain disruptions and higher import costs will hit some sectors hard, like manufacturing and retail. Avoid those for now.

But remember, QE is massive liquidity. That cash eventually finds its way into equities, especially growth and tech names that thrive on cheap money. Keep an eye on QQQ after the initial dust settles; it could be a longer-term winner.

My Take

I’m cautiously bullish here, especially on gold and long bonds. The market is overreacting to the initial trade war shock without fully grasping the massive QE implications.

When the Fed prints money, asset prices inflate. That’s a historical fact. We’ve seen this playbook before; cheap money finds its way into hard assets and growth stocks.

Don’t get caught up in the short-term panic selling. Position for the inevitable liquidity injection. The path of least resistance for money when rates are suppressed is into risk assets.

Conviction: high for gold and long bonds; moderate — headline risk remains for broader equities.

Macro Pulse FAQ

Q: Is quantitative easing good for stocks?

A: Eventually, yes. QE floods the market with liquidity, making borrowing cheaper and inflating asset prices. It takes time for the money to filter through, but it usually boosts equities.

Q: What assets should I buy if the Fed does QE?

A: Gold and long bonds are primary beneficiaries. Stocks, especially growth-oriented ones like tech, also tend to perform well once the initial shock wears off and liquidity takes hold.

Q: Will this trade war cause a recession?

A: It significantly increases the risk. Tariffs hurt businesses and consumers, leading to slower economic activity. That’s why the Fed is even considering QE as a response to avert a deeper downturn.

Q: How quickly will QE impact markets?

A: The announcement itself can trigger a reaction, but the full impact takes months. Traders need to anticipate the Fed’s moves and position ahead of time.