Trump’s tariffs: let’s recap and stay the course

A fast-developing situation and a challenging time for investors. What will the short- and long-term impacts of the tariffs be?

Long shot of the White House in Washington DC

On Saturday, February 1, 2025, President Trump signed an executive order with tariffs on goods from Canada, Mexico and China. 

What was announced initially:

  • 25% tariff levied on imports from Canada and Mexico and 10% tariff on Canadian energy resource imports from Canada.
  • 10% tariff levied on imports from China.
  • Tariffs were expected to take effect February 4, 2025.

Within hours after, Prime Minister Trudeau announced retaliatory tariffs on a range of US products, to include a 25% tariff on $155 billion worth of US goods entering Canada. 

Then, on February 3rd, it was announced that the tariffs on both Canada and Mexico will be paused for a month. This update came as leaders of both nations conversed with President Trump, agreeing to further efforts to address his concerns regarding border security. The updates came at different times of the day, and market reaction to both were swift, with the Canadian dollar (CAD) reversing all losses versus the US dollar (USD). 

This is a fast-developing situation and will be a challenging time for investors. At this moment, there is limited understanding on what short- and long-term impacts the tariffs will have. These events underscore the need to focus on the longer term, as the situation can change in very short order.

Even though there has been a pause in tariffs, many investors may remain concerned about the potential impacts of this situation. 

How do ATBIM portfolios help weather these storms?

At ATB Investment Management Inc. (ATBIM) we are well-positioned to navigate market volatility through our focus on equity strategies—investing in companies that generate sustainable cash flows and allocate capital prudently with reasonable levels of debt exposure. We also consider the impact of currencies within our asset mixes.

Fixed income holdings within the portfolio have historically had a lower sensitivity to interest rates relative to the market, and this still remains the case. This is beneficial in a market where interest rate volatility has spiked dramatically. The proportion of government bonds in the portfolio is also higher compared to historical norms, which provide an extra layer of stability. 

The portfolios are designed and managed to protect over the long term and maintained with diversification in mind. This involves investing in multiple asset classes, sectors, regions, and sub-advisors. We also have the ability to make tactical changes to evolving market conditions to execute on opportunities as they arise while working to preserve portfolio resilience. 

For long-term investors, multi-level diversification is crucial to minimize exposure to unforeseen events and avoid reacting to market volatility. Trade negotiations are inherently complex especially between countries that are as interconnected as Canada and the US. The quick reversal in the CAD versus the USD and other market reactions that were quickly retracted underscore the importance of keeping focus on the long term and tuning out market noise which can lead to emotional and impulsive decisions that can be detrimental to long-term returns.

Investing in ATBIM portfolios helps investors stay the course and focus on long-term investment goals. We remain dedicated to guiding you through these uncertain times with sound strategies and market insights. If you have specific questions or concerns about your portfolio, your financial advisor is a great resource. 

 

This report has been prepared by ATB Investment Management Inc. (ATBIM). ATBIM is registered as a Portfolio Manager across various Canadian securities commissions with the Alberta Securities Commission (ASC) being its principal regulator. ATBIM is also registered as an Investment Fund Manager who manages the Compass Portfolios and the ATBIS Pools. ATBIM is a wholly owned subsidiary of ATB Financial and is a licensed user of the registered trademark ATB Wealth.

Opinions, estimates, and projections contained herein are subject to change without notice, and ATBIM does not undertake to provide updated information should a change occur. The information in this document has been compiled or arrived at from sources believed reliable but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. ATB Financial, ATBIM and ATB Securities Inc. do not accept any liability whatsoever for any losses arising from the use of this report or its contents.

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