Canadian National Railway (CNI) saw its stock plummet around 5% in pre-market trading on Monday, underperforming the broader market. The sell-off came after an analyst downgrade citing concerns over the potential impact of US trade tariffs on the railroad operator's cross-border business.

Loop Capital analyst Rick Paterson cut his rating on CNI to Sell from Hold, warning that newly imposed US tariffs could lead to short-term inflationary pressures. He expects the tariffs to reduce demand for goods transportation and potentially push Canada and Mexico, where CNI has significant operations, into a recession.

"If this tariff policy is maintained for more than a few months, it will likely put Canada and Mexico into recession, given the U.S. accounts for 75% and 80% of their exports, respectively," Paterson wrote. He added that all transportation companies with cross-border exposure like CNI "will be hurt by a simultaneous economic contraction north and south of the border, further exacerbating weakness in cross border flows."