Before the trade fight started, about 90% of what Canada exported to the United States crossed the border duty-free under the North American trade agreement. After a year of tariffs, Joe Overdevest puts the figure at about 85%.
Canada spent the year as the headline victim of US trade policy. Its stock market spent the same year beating the S&P 500 over one, three and five years, on what Overdevest calls strong fundamentals and attractive valuations.
"And as true Canadians, we're being humble about it, we are not bragging about it."
Overdevest runs the Global Natural Resources Fund for Fidelity's Canadian institutional business, and spends most of the year in meetings with the chief executives of the companies he owns.
The full interview is covered here so you can skip it. 31 minutes of audio, 17 minutes of reading.
Here are the 10 insights that matter.
👤 Guest: Joe Overdevest, Portfolio Manager of the Global Natural Resources Fund at Fidelity Investments Canada, who covers Canadian equity for institutional clients
🎙️ Host: Agnes Doherty, who presents FidelityConnects for Fidelity Investments Canada
📰 Published: 14 September 2026 on FidelityConnects
🔴 YouTube | 🔗 Episode page | ⏱️ 31 min | ✅ Time saved: 14 min
Key Takeaways
Roughly 85% of Canadian exports still cross into the United States without a tariff, down from about 90% before the dispute
The damage is concentrated in autos, recreational vehicles and small manufacturers that ship directly south
Canada's stock market has beaten the S&P 500 over one, three and five years
The index is weighted toward resources, banks and industrials, and all three are working at once
Canada's bank regulator has started letting banks release capital rather than build it
That funds dividends, buybacks and loan growth, and it reverses fifteen years of policy
Canadian oil companies are not adding rigs even with crude near $90
Overdevest's question for their chief executives this month is what they do with the cash instead
Texas putting a pause on data centers is the signal he takes most seriously in the AI trade
Physical constraints — land, permits, power and local consent — are what he thinks will set the pace
Three separate forces are pushing agricultural commodity prices up at once
Drought, Middle East gas disruption feeding into fertilizer, and an El Niño he says could be very destructive
Venezuelan heavy oil going into the United States is part of why Canadian heavy crude sells at a discount
Almost every company he meets now raises AI, and almost none of them say they are using it to cut jobs
1. Stocks Follow Earnings
Agnes Doherty opened on the noise — tariffs, renewed conflict in the Middle East, the question of whether AI is a bubble — and asked what actually matters. Overdevest's answer was a maxim he attributes to Will Danoff, who got it from Peter Lynch: stocks follow earnings.
His suggestion to the audience was to use AI to make the point rather than to trade on it: ask a model to chart the stock market over time, mark every shock — a contested election, a war, the US credit downgrade — and see how little of it shows up
"And I think that's for our audience is really understand that like, some of these news events get very emotional, but those emotions don't help you with investing. What helps you is the power of compounding," he said
The better question to put to a model, on his account, is how much can be invested and compounded over 10, 20, 30 or 50 years
He said earnings growth in the United States is very strong, and that the fundamentals are what he checks when he talks to chief executives
2. Canada Is Quietly Winning
The second thread is the one the episode keeps returning to, and Overdevest raised it himself before the host could.
"And Canada, well I'm sure we'll get to, is quietly outperforming on a one, three and five year basis. And as true Canadians, we're being humble about it, we are not bragging about it. But the Canadian market is actually outperform the S&P 500 because of very strong fundamentals and generally attractive valuation."
The index composition is the explanation. Resources are a large share and are tariff-free; the Middle East conflict has raised demand for oil and gas, with a knock-on effect in agriculture
Copper demand is coming from AI and electrification, and gold from renewed central bank buying and questions about how large deficits get resolved
Banks are the next block of the index and are, in his phrase, quietly doing extremely well
"And then even when you get into some of the industrials, some of these industrial companies are actually seeing a renaissance of actually being an AI beneficiary," he said
3. 85% Still Tariff-Free
Doherty asked why Canada has held up despite the rhetoric about what tariffs would do to its economy. Overdevest separated the emotional response from the arithmetic.
Before the dispute, he said, about 90% of Canadian goods exported to the United States were compliant with the North American trade agreement and therefore carried no tariff
"Now more recently, because we are getting tariffs, tariffed of course by the U. S., maybe 85% of our goods are still tariff free. So most stuff is actually tariff-free."
Small companies are hit hardest, he said, and some large ones too, but the listed Canadian market is made up of large companies weighted toward resources
Doherty's reaction was that the ratio never makes the headlines, and she rounded it to 80% of companies being unaffected — the point rather than the figure
The sectors he is cautious on are the ones with direct cross-border manufacturing: autos, recreational vehicles, a few small consumer companies and some industrials that build in Canada and ship south. Larger companies, he said, are usually diversified across North America
He would not rule any of it out, because the answer depends on price: "Yeah, I think everything comes down to valuations. So it doesn't mean we wouldn't invest there, but I think we would definitely, you have to do a lot of scenario analysis of what's the potential."
The scenario analysis has to run in both directions, because of how the other side negotiates: "They generally, their precedent is to threaten, make lots of comments, and sometimes the last minute change, and go right back to ground zero, or just go, oh, they're off kind of thing. They've done this before."
4. Agriculture's Three Drivers
An audience question on agricultural equipment and technology sent the conversation into fertilizer, weather and autonomous sprayers. Overdevest said his team had been updated by its agriculture analyst that morning.
The first driver is a supply shortfall: "First of all, right now, U.S. Data that's coming out from how much farmers have actually laid in terms of their crops is lower than expected because of drought. And so if they haven't applied a lot in terms of their crop, that is actually bullish for the commodities, for the agriculture commodities in general, because less supply, of course, means higher prices."
The second runs from the Middle East into fertilizer. Nitrogen is made from natural gas; gas flows have been disrupted; and Europe is where the marginal tonne is produced: "Natural gas prices are quite high, especially in Europe, and nitrogen is produced in Europe so it sets the bar higher for everybody else, driving nitrogen pricing up. Bullish for agriculture."
He contrasted CF Industries in the United States, which he described as essentially all nitrogen, with Nutrien in Canada, which sells both potash and nitrogen and also has a retail business
The third is weather, and it is the one he says nobody is talking about: "So when you line up the weather patterns and where we are in history, the El Niño could be very destructive. So you could have extreme weather in certain parts of the world."
Some regions get very warm and others very wet, and, as he put it from a farming background in Windham Centre, "what happens with farming is that extreme temperatures are not good, and so it can be very disruptive to crops, and again, lower supply means higher crop prices, which ironically, I know we'll talk about oil, this is not the time the world needs more inflation concerns, especially not on the food supply"
On the technology, he pointed listeners at an interview with John Deere's chief executive on the In Good Company podcast, and gave the example himself: sprayers that release herbicide only onto the seed, and AI that decides in real time which plant is a weed and sprays only that
5. The Banks Release Capital
Doherty asked what is going on behind the scenes at the Canadian banks. Overdevest gave several reasons, and the last one is a policy reversal.
"With the banks, what's going well is that number one is wealth and, in particular, trading. Capital markets are doing extremely well. And even M&A is starting to bubble up, because the capital markets are generally doing well. And people want to do acquisitions."
He named Alimentation Couche-Tard's recent purchase of a European business as evidence that deals are still happening despite the tariff overhang
Another is that the credit provisions were taken early: "The Canadian banks luckily reserved very conservatively probably a year or two ago already for tariffs." Those reserves assumed a worse outcome than has arrived, so the banks do not have to add to them
The last is the regulator changing direction after fifteen years. Since the financial crisis, he said, supervisors in both countries told banks to keep raising capital, which mechanically lowers return on equity
"Well, what happened this year, the regulator in particular in Canada has said we can now release capital. So that leads to more dividends, more buybacks, and more loan growth, that they now have the ability to deploy capital, which is very positive."
6. What He Asks the CEOs
September is a heavy month of company meetings for the fund — bank chief executives, insurance chief executives, energy, industrial and consumer companies — and Doherty asked what he takes into the room.
For the banks, the question follows directly from the capital release: "Yeah, I think on the banking side, you have this extra capital, what are you going to do with it?" Dividends and buybacks are the obvious uses; what interests him is whether they would deploy it in the United States
The political question underneath that has no clean answer: whether a Canadian bank would be permitted, by either administration, to buy an American one. He said there is no clear answer and that it brings risk
For energy, the question is about cash that was never budgeted: "On the energy side is you have all this excess cash flow now that you probably didn't plan the beginning year when oil was 60, now you're close to 90, what are you going to do with it?"
The answer so far has been nothing: "Because the Canadian energy companies for the most part have actually just been status quo. Because this event is such an extreme event, they're not deploying more capital or adding more rigs."
For industrials and consumer companies it is a straight read of end markets, and the split is stark. "Because again, if you're selling into an AI data centre, you generally are still feeling pretty well." Selling into the American consumer is a tougher business, he said, with high gasoline prices weighing most on low-income households
7. Canada's Heavy Oil Discount
An audience question asked why the spread between Canadian heavy crude and the American benchmark has widened. Overdevest explained the mechanism and then pointed at Venezuela.
The spread is a supply-and-competition price, he said: Canadian heavy oil mostly goes to the United States, which is why pipeline access to the coast and to other markets is such a political subject
What changed is another source of heavy barrels: "The production there is about a million barrels per day. We're seeing production go up at least about 100,000, 150,000 barrels per day more. And generally that's heavy oil." Those barrels go into the United States, displacing Canadian crude or forcing its price down
Doherty noted that Chevron had announced increased investment in Venezuela that morning. Overdevest said energy companies are somewhat more comfortable but that most remain apprehensive about the long-term outlook
The political risk he named is the duration of the current arrangement: "Because yes, President Trump would like us to invest. He may be out of power in two years, or at least his Republican party. Who knows?" He also noted that Venezuela has a history of seizing assets
The risk he treats as more important than either is local consent: "If the social licences not there, we've seen this in mining, we've see this in energy, you will have a problem. What that means is the locals don't want you there. They can make it very difficult. They can start protests."
On the numbers, he gave a slow path rather than a fast one: "Venezuela is like 1.2 million barrels per day, give or take now." They were a little over one million before the change earlier in the year, and on his bullish scenario could reach two million by 2031 — against three million historically, with facilities he described as still very under-capitalized
8. Alberta's Better Mood
Doherty said Overdevest had come back from meetings in Alberta a few weeks earlier sounding more optimistic, and asked what he had heard.
"So, our Canadian Energy is very resilient, there's some very hard-working entrepreneurs, so it's great catching up with them," he said
What has changed is the relationship with Ottawa. The industry's public comments describe a government that was unsupportive for years and a current administration that is not
The economic case he makes for that mattering is narrow and concrete: "It's positive because they pay a lot in taxes, they hire a lot of people, so that avenue of our economy starts going a little faster." He named Alberta, British Columbia and Saskatchewan first, and said other provinces benefit too
Two things have already happened in public, on his account: a pipeline announcement the federal government will fund and direct, and a commitment from the oil and gas companies to invest in carbon sequestration
"It's something the Canadian government wanted," he said of the second
What he is watching next is the budget, and specifically whether Ottawa or the provinces offer tax or royalty relief. His argument is that the industry does not need money, only an incentive: the companies have lots of cash and strong balance sheets
The competitive reference point is American depreciation rules, which let a company take the tax benefit of a plant in year one rather than spreading it. His case is that matching that would pull deferred investment forward: "If you do it in year one, there's a huge tax benefit for you. Generally, we've seen in history, that's very bullish for the Canadian economy and any other economy." He said the ball is in the government's court, and that it need not be limited to oil and gas
9. Copper Tight, Gold Bid
Asked how he thinks about copper and gold, and whether he prefers one, Overdevest separated a supply story from a monetary one.
Copper demand comes from electrification of the grid, with AI data centers a small but growing part. The larger factor is supply: "There's a number of mines that had issues, they essentially operational issues. One of them had a social licence go away, and again, was shut down."
Mine supply is visible years ahead, which is what makes the imbalance forecastable: analysts can see new projects coming as much as a decade out, while demand grows gradually
"And what happens there is that if the supply doesn't really change and demand keeps going up, the price has to adjust," he said, which is his reading of the copper price reset
On gold, he said the first half of the year took some shine off, because higher oil raised the prospect of higher US rates and rates are usually negatively correlated with the metal
What has turned it is official buying: "But you're seeing now is that the central banks, China and others, are buying gold again. And the pace is pretty significant."
The second driver is fiscal: "And that is deficits. In particular, the US, but all across the G7, we have large deficits. And no one really seems to wanna fix them."
History, on his reading, is that nobody fixes a deficit until inflation is very high and voters remove the government, after which the next one cuts hard
He noted 10- and 30-year US yields creeping up, and said the two ways out — austerity or printing — leave gold as the thing that sniffs the second one out first
10. Canada's AI Beneficiaries
The last theme was AI, and Doherty asked both who wins in Canada and what is happening with local opposition to data centers.
The rotation he describes has already started: "Especially AI, I think was AI winners or hardware was really winning. Now obviously some of that's now getting a little muffled as in like the software's starting to come back, hardware's starting come down."
Three things explain it. Valuations and expectations were extreme; the physical execution is hard; and cheaper open models have arrived
The physical constraints are the part he treats as binding: "They need to get the physical space. They need to the permits. They need the local people on site. They need get the power. And these are like constraints that are real constraints."
The evidence he finds most striking is political: "And what's interesting is you're seeing local people now saying like in big states, New York, Texas, saying we're putting a pause on data centres."
"Especially Texas, that's a real wake-up call for the industry, that even Texas is saying we're taking a pause on this," he added
The mechanism is the same one he applied to Venezuela: "The social licence, because they're getting feedback from the local people saying, I'm going to throw you out of government if you keep approving these data centres." Board rooms can decide, he said, but without local people on side it does not happen
On open models, his point is about the five companies spending to stay at the frontier — and whether any of them decide it is not worth it. He extended that to two coming listings: "And if Anthropic and OpenAI, which are two big IPOs happen, if they, people start questioning what they're gonna be paying, in terms of like services for their tokens. That could bring down the valuations of those two and they need a lot of money to spend on data centres."
On Canadian winners he named the obvious and the less obvious: "Canada, look, we got the obvious one, Celestica makes chips, okay? But less obvious is the industrial space. We have Finning, we have Toromont." Meta is, he said, the only data center really announced in Canada so far, but Toromont already supplies parts of data centers being built in the United States
The other candidates are the banks and insurers, on a data argument: "A lot of data, if you can use AI properly, you can really make efficient the back office operations, the risk controls, and even executions of simple banking transactions like getting a mortgage."
Nobody he meets is skipping the subject: "It's tougher to call a company that I think has not brought up AI in a meeting. So even the food processing companies are bringing it in. So they're all using it. I think we're actually more at the testing phase."
And almost nobody is framing it as a headcount decision: "Look, almost all the companies you talk to very rarely are saying right now, we're looking to displace people. If anything, right now we're just testing to figure out the effectiveness of it. And if possible, using it to make everyone more effective as opposed to replacing humans."
The brake, in financial services, is security — and it is the supervisor's concern as well as the bank's: "You could see a call from the regulator saying, you need to slow down AI."
Bonus Insights
Doherty opened the programme with Alberta's own numbers: output in June was 1.6% higher than a year earlier, extending growth from a record year in which production averaged 4.1 million barrels a day
Asked what he would say to investors sitting in cash because the market is near all-time highs, Overdevest said they would have felt the same a year ago, and two, three, four and five years ago
"And so I think, again, the power of compounding is that, if you're not, you're off by like six months, 12 months, or whatever time period you think you might be off, it's really not that big a deal."
"The major companies in Canada are continuing to grow, generally the stock market continues to grow. That's the end of it."
His two podcast recommendations were Acquired, whose episode on the NFL he liked because it analyzes a private organization the way it would analyze a business, and Capital Allocators, whose interview with a hostage negotiator that morning he said applies directly to getting information out of a chief executive
He grew up in the farming town of Windham Centre and said he is proud of it
Doherty's response to the AI weed-spraying example was that she needed it for her back garden
Overdevest's bottom line is that the Canadian market's outperformance is a fundamentals story rather than a tariff story — resources, banks with capital to release and industrials selling into the AI build-out, all working at once — and that the constraint on that build-out is turning out to be local consent rather than capital.
Products, Companies & Tools Mentioned
Nutrien and CF Industries (The fertilizer comparison: CF is essentially a nitrogen producer, while Nutrien sells potash, nitrogen and retail, with European gas prices setting the marginal cost of nitrogen)
John Deere (The agricultural technology example — herbicide released only onto the seed, and AI that identifies a weed and sprays only that)
Alimentation Couche-Tard (Named as evidence that Canadian mergers and acquisitions are still happening despite the tariff overhang, after buying a European business)
Chevron (Announced increased investment in Venezuela the morning of the recording; Overdevest said other energy companies remain more apprehensive)
Celestica, Finning International and Toromont Industries (His Canadian AI beneficiaries — Celestica the obvious one, and the two heavy equipment dealers the less obvious ones, with Toromont already supplying data centers in the United States)
Meta (The only data center Overdevest says has really been announced in Canada so far)
Anthropic and OpenAI (Two large coming listings whose token pricing, he says, could be questioned in a way that hits both valuations and their data-center spending)
Books & Resources Mentioned
In Good Company (The podcast whose interview with John Deere's chief executive Overdevest listened to that morning and recommended twice)
Acquired (His first recommendation; he singled out the NFL episode for treating a private organization as a business)
Capital Allocators (His second; the episode with a hostage negotiator, which he says transfers directly to interviewing chief executives)
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