Canadian Pacific profits leap despite U.S. tariff turmoil and looming merger prospect

Grain, potash and container volumes rose markedly year-over-year while forest products — struggling under a sectoral tariff imposed by U.S. President Donald Trump — and energy, chemicals and plastics sagged.

“Despite what has been consistent macro and trade policy headwinds, the team continues to generate a diverse, profitable growth across a number of areas,” chief executive Keith Creel told analysts on a conference call Wednesday.

Cross-border steel shipments also dropped due to 50 per cent U.S. tariffs on imports of the metal, though CPKC helped make up the decline with domestic traffic and direct Canada-to-Mexico trade, said chief marketing officer John Brooks.

A new item of concern crossed the CEO’s desk over the summer. Union Pacific Corp., the second-largest railroad operator in the United States, announced in July it wants to buy Norfolk Southern Corp. in a US$85-billion deal that would create that country’s first transcontinental railway, and potentially trigger a final wave of rail mergers across North America.

The proposed merger would marry Union Pacific’s vast rail network in the Western U.S. with Norfolk’s rails that snake across the country’s eastern half. The combined railroad would include more than 80,000 kilometres of track in 43 states with connections to major ports on both coasts.

Creel said that without major conditions the acquisition would damage competition, cost customers and place unprecedented market power in the hands of a single railway, which would handle some 40 per cent of American freight traffic.

“A merger of this magnitude introduces unprecedented risk by heavily concentrating much of the decision making for our national rail network, with undeniable implications on the entire supply chain,” Creel said.

He qualified that the north-south flow of traffic at CPKC — the only major railway to span all three countries in North America following Canadian Pacific’s purchase of Kansas City Southern in 2023 — partly insulates it from the would-be merger.

Some analysts questioned his optimism.

“You’re saying there’s really no risk for CPKC (which) is north-south flows. But at the same time the kind of market power of such a large railroad — UPNS — would really be something of concern,” said UBS analyst Tom Wolowitz.

Another analyst questioned whether concerns from CPKC would be taken less seriously by U.S. regulators “by virtue of being a Canadian rail.”

Creel, an Alabama-born former U.S. army officer, pointed out that 40 per cent of CPKC’s business stems from the U.S.

“The money we invest is significant. A third of our employees live and work and are taxpaying members of the United States,” he said. “We are undeniably wrapped in the American flag.”

Union Pacific and Norfolk Southern argue a merger would streamline deliveries of raw materials and goods countrywide by eliminating delays when shipments are handed off between railways.

Any deal would be closely scrutinized by antitrust regulators that have set a very high bar for railway deals after previous consolidation in the industry led to massive backups and snarled traffic.

Speculation has swirled that the merger might win approval under Trump’s pro-business administration. The U.S. Surface Transportation Board was evenly split between two Republicans and two Democrats until August, when the president fired a Democrat-appointed member. A Republican chairs the board, and Trump is slated to appoint at least one more member before the deal will be considered.

On Wednesday, CPKC reported that core diluted earnings per share jumped to $1.10 per share versus 99 cents per share last year, just shy of analysts’ expectations of $1.11 per share, according to financial markets firm LSEG Data & Analytics.

This report by The Canadian Press was first published Oct. 29, 2025.

Companies in this story: (TSX:CP)

— With files from The Associated Press