Canadian Pacific Kansas City Ltd. has suffered a $200-million blow from the ongoing tariff war set off by the United States, said CEO Keith Creel, who nonetheless remained upbeat amid ongoing doubts about the North American free trade pact.
“We’ve already absorbed a pretty significant hit from all the uncertainty — I think about $200 million of revenue impact, maybe higher,” Creel told analysts on a conference call Wednesday.
The chief executive, who helms the only railroad to span all three countries on the continent, said the upcoming renegotiation of the United States-Mexico-Canada Agreement can be mutually beneficial while also rejigging cargo flows to reduce the trade deficit that U.S. President Donald Trump has repeatedly cited as a source of aggravation.
“Positive renewal of the USMCA can be true at the same time, because trade between these three nations, even if it gets rebalanced a bit, is critically important to all three nations’ success. We depend upon each other,” he said.
The chief executive expressed hope that the deal, which has seen trilateral trade more than quadruple to over US$1.6 trillion since the North American Free Trade Agreement came into effect in 1994, would be renewed this summer.
“I would think before the midterms. That’s just me speculating based on the way I’m reading the tea leaves,” he said.
Creel then qualified: “We’ve gone through some choppy waters. They may get choppier. But at the end of the day, we’ll get through the storm.”
In its latest quarter, CPKC managed to nudge up revenue by one per cent to $3.92 billion, partly on the back of improved operating efficiency and in line with a slight boost in freight volumes. A bumper crop helped drive grain revenues to record highs, though rain at the Port of Vancouver curtailed that increase.
“We continue to like CPKC’s growth outlook driven largely by new business wins and merger-related synergies that are independent of the macro,” said National Bank analyst Cameron Doerksen in a note to investors.
Despite a revenue uptick that capped off a year of solid earnings increases, CPKC said profits fell 10 per cent in its latest quarter. Net income declined to $1.08 billion in the quarter ended Dec. 31 from $1.20 billion in the same period a year earlier.
On top of trade angst, a less publicized source of anxiety has rippled through the rail industry since last 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 has 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.
On Wednesday, he launched into a spirited 10-minute monologue warning of the risks of consolidation.
“If it fails, we’re in trouble. The nation could be brought to its knees with something that large affecting our entire rail transportation system in North America,” he said.
On Jan. 16, the Surface Transportation Board, a U.S. agency that regulates railroads, rejected the UP-NS merger application as incomplete and asked the parties to flesh it out.
“How can you exclude railroads — I think they deemed it Canadian railroads — that originate traffic west of the Mississippi and ship to destinations east and vice versa? Those are American-generated shipments going to American locations. That’s part of making America great again,” Creel said.
Speculation has swirled that the merger might win approval under Trump’s pro-business administration. The 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 has nominated another for the fifth spot.
On Wednesday, CPKC reported that core adjusted diluted earnings rose three per cent to $1.33 per share from $1.29 per share, just shy of analysts’ expectations of $1.35 per share.
For the full year, net income jumped 11 per cent to $4.14 billion and revenues climbed almost four per cent to $15.08 billion.
For 2026, the Calgary-based company predicted volume growth in the mid-single digits and low double-digit growth in core adjusted diluted earnings per share. It also planned to cut capital expenditures by 15 per cent to $2.65 billion.
The board also announced a quarterly dividend of nearly 23 cents per share on outstanding common shares, payable on April 27.
This report by The Canadian Press was first published Jan. 28, 2026.
Companies in this story: (TSX:CP)
