Tariff Update #2

The Trump administration has officially implemented 25% tariffs on non-energy Canadian exports, with energy products facing a 10% rate.

Hope is an emotion, but investing requires pragmatism. While Canadians hope for a swift resolution, tariffs are now reality.

Canadian Response

Canada announced retaliatory 25% tariffs on $155 billion in U.S. goods—roughly 40% of Canadian imports. Phase one ($30 billion in consumer items) took effect immediately. Phase two ($125 billion covering vehicles, steel, aerospace products) enters a 21-day comment period.

Duration: The Critical Factor

Tariff longevity poses the greatest risk. Consumer sentiment has declined significantly, with surveys showing nearly two-thirds pausing capital investment pending trade clarity. The Bank of Canada is 95% likely to cut rates, with 0.75% total cuts anticipated this year.

Looking Forward

We recommend preparing for increased volatility, avoiding unnecessary risk, maintaining investment positions, utilizing fixed income and alternatives to smooth returns, and leveraging active managers to identify sector-specific opportunities.