There's a great deal of uncertainty surrounding the fate of various Canadian industries in the face of potential Trump tariffs come the new year.

Undoubtedly, the meeting between PM Justin Trudeau and President-elect Donald Trump was a step in the right direction. However, many unanswered questions still have some Canadians feeling just a bit on edge. Indeed, a 25% tariff could take a heavy hit and cause ripple effects through the labour market. With so much on the line, few folks seem to be treating potential Trump tariffs as a bluff.

Investors looking to take a bit of risk off the table may wish to lighten up on the names that could take on considerable damage if wide-sweeping 25% Trump tariffs were applied on goods imported into the U.S. from Canada.

Though things are sure to change in the coming weeks and months (perhaps a lower tariff or limitation on specific types of goods), I wouldn't look to overreact either way. The real risk, I believe, would be the beginning of a trade war, one that could see retaliatory tariffs being thrown back and forth. In such a scenario, certain industries could take a potentially sizeable hit on the chin.

Here is one TSX stock that may take a hit to their earnings over the medium term if sweeping 25% tariffs were to be put in to start the new year.

Magna International

Magna International (TSX:MG) is a Canadian auto-part maker that's already gotten dinged following the recent wave of Trump tariff tremors. Though I don't think a 25% tariff will be applied (there's still time to prevent or even delay the tariffs) to kick off 2025, I think that there is a non-zero chance that tariffs could happen. And if they do, it'll be tough for Magna to avoid the heavy blow, given many of its plants will be within affected regions.

In any case, MG stock may be a solid bet for the deep value (12.1 times trailing price-to-earnings, or P/E, multiple) and the 4.21% dividend yield if you're in the belief that tariffs won't be as sizeable, sweeping, or lost-lasting. If 25% tariffs do happen, perhaps the likely dip that follows (I'd look for the low-$50 range) will be buyable for Canadian investors seeking an even better deal.

It's not just tariffs weighing down Magna stock

Tariffs or not, the auto industry already seems to be in a world of pain. And a great deal of the industry weakness, I think, has mostly been baked into the share price here. The company has also reduced its spending and outlook in response to the wobbly environment.

And while the downside revisions for the longer-term outlook make it difficult to get behind the name on weakness, I'd argue that shares of MG are already cheap enough that they may not be all too rattled if the next several quarters end up disappointing. Indeed, if expectations are severely depressed, all it can take is the slightest glimmer of hope to move the needle higher on the stock.

The bottom line

The only question is whether this cheap stock has become cheap enough. Unless 25% Trump tariffs come to fruition, I view MG stock as a severely undervalued dividend bargain that Tax-Free Savings Account investors should consider. Personally, I'd put the name in the wait-and-see camp. The last thing Magna needs is another thing to worry about.