Tariffs and the Trump card
Updated: April 4, 2025
Published: March 10, 2025
By Wesley Blight and Mark Fairbairn
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?
February 1, 2025: Trump announced tariffs on Canada, Mexico, and China, effective February 4. Canada prepared retaliation. The initial effective date for Canada and Mexico was later postponed due to temporary agreements.
February 3, 2025: Canada and Mexico tariffs were delayed one month after border security agreements.
February 4, 2025: 10% tariffs were implemented on China. China responded with modest countermeasures.
February 10, 2025: Trump announced 25% tariffs on all steel and aluminum imports starting March 12.
March 4, 2025: Tariffs on Canada and Mexico were implemented at 25%. China faced an increase to a 20% tariff from the initial 10%. Canadian energy imports were subject to a 10% tariff.
March 5, 2025: Canada announced retaliatory tariffs targeting U.S. agricultural products and steel.
March 6, 2025: Trump paused tariffs on USMCA-compliant goods until April 2. Half of Mexican and over 60% of Canadian imports remained subject to duties.
March 12, 2025: 25% tariffs on all steel and aluminum imports took effect. Canada announced additional retaliatory tariffs on over $20 billion worth of U.S. goods.
March 14, 2025: The EU announced plans to impose retaliatory tariffs on U.S. goods in response to U.S. steel and aluminum tariffs, effective April 2025.
March 18, 2025: The Trump administration confirmed that reciprocal tariffs are still intended to take effect on April 2, offering countries a chance to negotiate before implementation.
April 2, 2025: Trump issued an executive order imposing a global tariff of 10% on all imports starting April 5. Additionally, reciprocal tariffs ranging from 11% to as high as 50% were announced for countries with large trade deficits with the U.S., effective April 9. Notable increases include a 34% tariff on imports from China and a 20% tariff on imports from the European Union. Canada was exempted but still faces tariffs from March and a 25% tariff on steel and aluminum.
April 3, 2025: A new tariff of 25% on imported cars took effect. Key auto parts such as engines and electrical systems are scheduled for additional tariffs starting May. Prime Minister Mark Carney responded with a 25% tariff on imports of U.S. vehicles.
April 4, 2025: Trading partners pledged retaliation against the sweeping tariff measures announced earlier in the week. China retaliated against the U.S. with a 34% tariff hike on imports of U.S. goods starting April 10, export controls on seven rare earth minerals, and an import ban on some targeted items.
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