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Donald Trump’s tariffs have wreaked havoc on the Canadian economy. And, as Prime Minister Mark Carney keeps reminding us, there is no going back. This is the new reality.
Many of Canada’s major industries have been affected. It started with steel, aluminum, energy, and autos, then came copper and new tariffs piled on softwood lumber. More recently, furniture, cabinets, and trucks have been targets. Small businesses have been hit by the elimination of the de minimis exemption that allowed packages worth less than $800 to be sent duty-free to the U.S.
There’s undoubtedly more to come. Mr. Trump has now taken to slapping on new tariffs any time someone annoys him. Brazil has convicted a former president Trump liked? Fine, we’ll hit you with a 50% tax on imports. Ontario has created an ad that used a portion of a Ronald Reagan radio speech to promote free trade? The prize is a 10% tariff increase and a suspension of trade negotiations with Ottawa.
Many companies are caught in the crossfire, including some who don’t export any goods at all to the U.S. One example is Descartes Systems Group. Based in Waterloo, Ontario, it’s in the business of providing a wide range of information and solutions for companies involved in global trade.
The Descartes Systems Group (TSX: DSG), which posted a 47% gain last year, is off 17.4% year-to-date in the light of what CEO Edward J. Ryan referred to the “very challenging market conditions” faced by Descartes and its clients.
Descartes provides on-demand, software-as-a-service solutions focused on improving the productivity, performance, and security of logistics-intensive businesses. Customers use its services to route, schedule, track, and measure delivery resources; plan, allocate, and execute shipments; rate, audit, and pay transportation invoices; access global trade data; file customs and security documents for imports and exports; and complete numerous other logistics processes. The company’s headquarters are in Waterloo, Ontario and Descartes has offices and partners around the world.
Ironically, Descartes’ revenue and profits in the first half of the year showed respectable gains. The market’s negative view of the stock appears to be based on the concern that global trade will continue to slow, cutting into the company’s future business.
Mr. Ryan doesn’t think that will happen, despite the escalating trade wars.
“Our customers continue to face uncertainty in the costs of sourcing and moving goods across borders,” he said. “This has also impacted their ability to make pricing and investment decisions in an uncertain economic environment.
“For our customers, Descartes is a trusted provider to help them deal with the complexity of changes in trade relationships, tariffs, sanctions, and modes of transportation. Descartes' Global Logistics Network of technology and connected parties continues to be relied on by shippers, carriers, and logistics services providers to keep goods moving.”
The World Trade Organization now expects the volume of global merchandise trade to decline by about 0.2% this year. If there is further escalation, for example more reciprocal tariffs, such as those the Liberal government recently announced for automakers GM and Stellantis, the drop could be as much as 1.5%.
Descartes is in an unusual position. The more complex global trade rules become, the greater the need for its services. But the lower the volume, the less the potential demand.
The impact of Donald Trump’s tariffs on world trade are affecting Descartes’ business, although the company was still able to report increases in revenue and profits in the second quarter of fiscal 2026 (to July 31).
Revenue came in at $179.8 million, up 10% from $163.4 million in the second quarter of fiscal 2025 and up 7% from $168.7 million in the previous quarter. Note that the company reports in U.S. dollars.
Net income was $38 million ($0.43 a diluted share), up 10% from $34.7 million last year. Net income as a percentage of revenue was 21%, consistent with last year’s result.
Revenues for the first six months of the fiscal year were $348.6 million, up 11% from $314.8 million in the same period a year ago. The bulk of the business is services revenue, which was up 14%, to $323.4 million (93% of total revenues). The balance was made up of professional services and other revenues of $24.6 million (7% of total revenues) and license revenues of $0.6 million (less than 1% of total revenues).
Descartes has grown both organically and by acquisitions and the company announced the purchase of two more related businesses, PackageRoute Holdco, Inc., a leading provider of final-mile carrier solutions for $1.9 million, and Finale, Inc., a U.S.-based provider of cloud-based inventory management solutions for $40 million.
The company did not update its forward guidance, but the evidence of a slowdown in world trade, which is the core of its business, is evident in the falling share price.
This stock would be of interest to growth-oriented investors with a higher tolerance for risk. Consult with your financial advisor before investing to ensure it aligns with your risk tolerance and financial objectives.
Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.
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Notes and Disclaimer
Content © 2025 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.
Image: iStock.com/Shutthiphong Chandaeng
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