CEO says Canadian Pacific lost $200M due to tariff war last year

Canadian Pacific Kansas City Ltd. has taken a $200 million hit from the ongoing tariff war by the United States, said CEO Keith Creel, who nevertheless remained upbeat amid ongoing skepticism about the North American Free Trade Agreement.

“We’ve already taken a pretty big hit from all the uncertainty — I think there could be a $200 million impact on revenue, maybe even more,” Creel told analysts on a conference call Wednesday.

The chief executive, who operates the only railroad spanning all three countries on the continent, said the upcoming renegotiation of the United States-Mexico-Canada agreement could be mutually beneficial, as well as realign cargo flows to reduce the trade deficit, which U.S. President Donald Trump has repeatedly cited as a source of the increase.

He said, “A positive renewal of the USMCA can be true at the same time, because trade between these three countries, even if it is slightly rebalanced, is extremely important for the success of all three countries. We depend on each other.”

The chief executive expressed hope that the deal, which has more than quadrupled trilateral trade to more than US$1.6 trillion since the North American Free Trade Agreement came into force in 1994, would be renewed this summer.

“I would think before the midterms. I’m just guessing based on the way I’m reading the tea leaves,” he said.

Creel then said: “We’ve been through some choppy waters. They could be even rougher. But at the end of the day, we’ll weather the storm.”

Profit decreased by 10%

In its latest quarter, CPKC managed to increase revenue by one percent to $3.92 billion partly due to better operating efficiency and a slight increase in freight volumes. The bumper harvest helped push grain revenues to record highs, although rain at the Port of Vancouver dampened that increase.

“We like CPKC’s growth outlook which is largely driven by new business wins and merger-related synergies that are independent of macro,” National Bank analyst Cameron Doerksen said in a note to investors.

Despite revenue growth, which capped a year of solid earnings growth, CPKC said profits fell 10 percent in its latest quarter. Net income declined to $1.08 billion in the quarter ended December 31, from $1.20 billion in the year-ago period.

In addition to business anger, a less publicized source of concern has spread in the rail industry since last summer.

Union Pacific Corp., the second-largest railroad operator in the United States, announced in July that it wanted to buy Norfolk Southern Corp. in a US$85 billion deal that would create that country’s first transcontinental railway, and potentially trigger the last wave of rail mergers across North America.

The proposed merger would combine Union Pacific’s vast rail network in the western US with Norfolk Rail’s sprawling rail network in the eastern half of the country. The combined railroad will include more than 80,000 kilometers of track in 43 states, with connections to major ports on both coasts.

Creel has said a takeover without great terms would harm competition, pass on costs to customers and put unprecedented market power into the hands of a single railway that handles about 40 percent of U.S. freight traffic.

On Wednesday, he gave an impassioned 10-minute speech warning about the risks of integration.

He said, “If it fails, we’re going to be in trouble. Something that massively impacts our entire rail transportation system in North America could bring the country to its knees.”

On January 16, the Surface Transportation Board, a US agency that regulates railroads, rejected the UP-NS merger application as incomplete and asked the parties to complete it.

“How can you exclude the railroads – I think they assumed it was the Canadian railroads – that generate traffic west of the Mississippi and ship to destinations to the east and vice versa? Those are American-made shipments that are going to American places. This is part of making America great again,” Creel said.

Speculation has intensified that the merger could be approved under Trump’s pro-business administration. The Transportation Board was evenly divided between two Republicans and two Democrats until August, when the President fired a Democrat-appointed member. A Republican is chairman of the board, and Trump has nominated another for the fifth position.

On Wednesday, CPKC reported core adjusted diluted earnings rose three percent to $1.33 per share from $1.29 per share, below analysts’ expectations of $1.35 per share.

For the full year, net income rose 11 percent to $4.14 billion and revenue rose nearly four percent to $15.08 billion.

For 2026, the Calgary-based company predicts volume growth in the mid-single digits and low double-digit growth in core adjusted diluted earnings per share. It also plans to cut capital spending by 15 percent to $2.65 billion.

The board also declared a quarterly dividend of approximately 23 cents per share on outstanding common shares, payable on April 27.