The recent volatility in tariff implementations and threats has sent shockwaves through global markets, leaving Canadian investors grappling with heightened uncertainty. The fluctuating trade policies, particularly from the United States, have not only influenced stock market performance but also raised concerns about economic stability and personal investment strategies.
On April 10, 2025, U.S. President Donald Trump announced a 90-day pause on certain tariffs for most trading partners, leading to an initial surge in market optimism. However, this was swiftly overshadowed by the maintenance of a 10% blanket duty on nearly all U.S. imports, including key sectors such as autos, steel and aluminum.
Additionally, tariffs on Chinese imports were escalated to 125%, prompting retaliatory measures from China and deepening recession concerns. This policy unpredictability has resulted in significant market fluctuations, with the Dow Jones Industrial Average experiencing a 2.5% drop, reversing a substantial portion of its previous gains.
The Canadian economy has not been immune to these developments. Tiff Macklem, Governor of the Bank of Canada, highlighted at a Mississauga Board of Trade and the Oakville Chamber of Commerce in February the detrimental effects of trade tensions, stating, "While the new tariffs have not yet taken effect, the uncertainty around U.S. trade policy is already affecting our economy, and if the U.S. starts a protracted trade war, the consequences could be severe."
How Canadian investors should respond to market whiplash
For individual investors, such volatility can be deeply unsettling. Sara McCullough, a certified financial planner and owner of WD Development, advises against knee-jerk reactions: "The first step is you’re not going to do anything. You’re not panicking, you’re not selling anything, you’re not going to buy anything," she said on CP24.
Diversification remains a cornerstone of prudent investing, especially in turbulent times. Paul Shelestowsky, senior investment adviser at Meridian Credit Union and Aviso Wealth, also spoke to CityNews and suggests adjusting portfolios to include more stable assets: "Maybe we need to add more bonds to the portfolio and less stocks to give peace of mind." Bonds typically experience fewer fluctuations and offer steadier growth compared to equities.
Real Estate Investment Trusts (REITs) have also emerged as a potential safe haven amid the current economic climate. Analysts at UBS note that REITs have outperformed the broader market in 2025, attributing this to their minimal international exposure and backing by tangible assets. They highlight that REITs with self-storage properties, single-family rentals and manufactured homes are particularly resilient during periods of market volatility.
Budgeting and risk awareness in a shifting economic landscape
Beyond investment strategy, Canadians should be mindful of the real-world economic impacts of global trade instability. The Bank of Canada has emphasized that tariffs will increase the cost of imported goods and add to business expenses, leading to higher prices for consumers. This underscores the importance of adjusting personal budgets to account for inflationary pressures and rising costs on everything from groceries to electronics.
Another layer of complexity is the growing concern of insider trading and market manipulation in the United States. These practices can distort market signals and further destabilize investor confidence. Canadians are advised to stay informed through trusted financial sources and seek personalized advice from certified financial professionals to avoid getting swept up in the panic or misinformation that can circulate during volatile times.
Bottom line
While today’s market environment is fraught with uncertainty, Canadian investors can mitigate risk by focusing on long-term goals, staying diversified, preparing for inflationary trends, and remaining grounded in fact-based financial planning.
Sources
1. City News: Trade war would wipe out economic growth while pushing inflation higher: Tiff Macklem (February 21, 2025)
2. CP24.com: Tariffs are sending markets on a wild ride. Here’s advice for young investors (March 25, 2025)
3. Investopedia: REITs Could Be Poised To Outperform Market in an Uncertain Economic Climate, UBS Says (April 9, 2025)
4. Bank of Canada: Tariffs and trade uncertainty are hurting the Canadian economy (March 20, 2025)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
