Tariffs and the Trump card
March 10, 2025
The global economic landscape shifted dramatically since U.S. President Donald Trump's election, as he has threatened, imposed, and delayed tariffs on several major trading partners. As these policies unfold, you may wonder how they'll impact your portfolio, what we're doing to minimize these effects, and what steps you should consider taking.
What has happened?
Feb. 1 - Trump announced tariffs on Canada, Mexico, and China effective Feb. 4. Canada prepared retaliation.
Feb. 3 - Canada and Mexico tariffs delayed one month after border security agreements.
Feb. 4 - 10% tariffs implemented on China. China responded with modest countermeasures.
Feb. 10 - Trump announced 25% tariffs on all steel and aluminum imports starting Mar. 12.
Feb. 18 - 25% tariffs announced on autos, pharmaceuticals, and semiconductors. Details coming early April.
Feb. 27 - Trump confirmed Mar. 4 implementation for Canada and Mexico tariffs plus additional China tariffs.
Mar. 4 - Tariffs on Canada and Mexico implemented at 25%. China faces additional 15% tariffs on consumer goods.
Mar. 5 - Canada announces retaliatory tariffs targeting U.S. agricultural products and steel.
Mar. 6 - Trump pauses tariffs on USMCA goods until Apr. 2. Half of Mexican and 60%+ of Canadian imports still face duties.
What is the impact of these shifting policies?
Trade policy uncertainty has now emerged as the primary concern for investors in 2025. The market reaction has been significant—with the dramatic response highlighting escalating fears about a prolonged trade war and its potential impact on economic growth and corporate profitability.
If U.S. tariff rates rise, they will likely slow U.S. economic growth, pushing inflation higher, and keeping interest rates elevated across affected nations. North of the border, Canada faces particularly significant risks, as goods exports to the U.S. represent about 20% of its GDP.
Corporate earnings forecasts for 2025 have already been trimmed, but further downward revisions are possible as companies could face higher costs and potentially lower sales. Although, it should be noted that outside of these tariffs, Trump policies are generally seen a pro-growth, such as tax cuts and deregulation.
Here’s how we are responding
We are actively monitoring these developments and adjusting the Scotia Portfolio Solutions accordingly.
In times of uncertainty, quality matters more than ever. We continue to emphasize underlying strategies that give our portfolios access to high-quality companies with strong balance sheets, competitive advantages, and proven margin resilience during economic stress.
Diversification remains your portfolio's best defense. Our strategic allocation across asset classes, sectors, and geographies helps cushion your portfolio against sector-specific downturns while positioning you to capture growth across various market segments.
Multiple tools at our disposal to manage any long-term impacts. While much remains unknown about the tariffs' effects and our future relationship with our southern neighbors, we continuously monitor the evolving economic landscape to determine if strategic and tactical adjustments are needed to adjust the positioning of your portfolio for long-term growth.
Here’s what you should do
While trade tensions may trigger more volatility and headline noise, we must focus on what we can control. History shows that markets have successfully weathered similar challenges, making it important to stay invested during these times. Long-term investors who follow this approach typically achieve better outcomes. We recognize that this is easier said than done during uncertain times, which includes the current environment. Like a coach supporting you through tough times, we always encourage you to speak with your financial advisor so they can help ensure you remain on track with your plan.
Wesley Blight
Vice President & Portfolio Manager, Multi-Asset Management
Mark Fairbairn
Portfolio Manager, Multi-Asset Management