Investor Update: Trade Tensions Escalate, but We're Prepared

Investor Update: Trade Tensions Escalate, but We're Prepared

This article serves as an update to our previous Investor Update: Tariffs and Turbulence that we released early February. A lot has happened since that initial communication. What started as political posturing has now escalated into a full-blown trade dispute, with both Canada and the U.S. imposing tariffs and preparing for further countermeasures.

The initial hope was that negotiations could prevent a worst-case scenario and after a 30-day pause, it looked like diplomacy might win out. On March 4th, however, the U.S. went ahead with sweeping tariffs on Canadian goods, and Canada responded with its own retaliatory measures the next day.

Markets have been predictably rattled, with volatility picking up as investors digest the implications. While uncertainty is never comfortable, it’s important to remember that we’ve been here before. Trade disputes, policy shifts, and geopolitical events create short-term noise, but they don’t change the fundamentals of disciplined investing.

What’s Changed Since My Last Update?

1. The 30-Day Delay Came and Went

Back in early February, Trump announced broad tariffs on Canada and Mexico, tying them to border security concerns. After negotiations, a 30-day pause was agreed upon, giving Canada time to commit to additional security measures, including a $1.3 billion border investment and the appointment of a "Fentanyl Czar."

For a brief moment, it seemed as though cooler heads would prevail. Markets responded positively, and there was optimism that a deal could be struck before the deadline.

2. Tariffs Have Officially Landed

That optimism faded quickly. Negotiations stalled, and on March 4th, the U.S. went ahead with new tariffs on Canadian goods:

• 25% tariff on most Canadian exports
• 10% tariff on Canadian energy products

Canada immediately pushed back, calling the move unjustified and politically motivated.

3. Canada Hits Back with Retaliatory Tariffs

Within 24 hours, Prime Minister Trudeau responded with countermeasures, imposing tariffs on a range of U.S. goods:

• Food and agricultural products
• Alcoholic beverages
• Consumer goods

These measures are Phase 1 of Canada’s response, with additional tariffs likely in the coming weeks.

4. More Tariffs Are on the Table

Unfortunately, it would seem as though the dispute is just beginning. Trump has signaled further escalation, with new tariffs already scheduled:

• Steel & Aluminum: A 25% tariff on Canadian steel and aluminum takes effect March 12th.
• Automobiles: There’s talk of tariffs on Canadian auto exports, a potential gut punch to our manufacturing sector.
• Pharmaceuticals & Semiconductors: The U.S. is considering tariffs on countries that impose duties on American goods in these sectors.

While there’s still time for diplomacy, the situation has shifted from trade tensions to trade conflict, and markets are reacting accordingly.

5. The Markets Have Grown More Volatile

After a relatively complacent start to the year, market volatility is back. Anticipating the latest trade escalation, the Dow Jones, S&P 500, and Nasdaq were all down 1.4% on March 3rd, while the Toronto Stock Exchange fell 1.54%, it’s biggest single-day drop this year. As I write this update, the markets are posting losses in the same range today, March 4th.

It’s important to note that average daily fluctuations of the stock market are typically close to 1%, and so this drop represents a relatively modest move on the markets. As a side note, be wary of news organizations that report  the drop in numbers  instead of percentages, as it can sometimes be used to create attention-grabbing headlines. For example, ‘Stock market falls 1000 points!’ is a better headline than ‘Stock market falls marginally more than normal market day’. 

How We’re Positioned: A Resilient Portfolio for Volatile Times

The reality is that markets dislike uncertainty. While headlines are noisy, our investment strategy still remains clear and disciplined.

• Cash Reserves – Liquidity is key. Having cash on hand allows us to navigate volatility without being forced into reactive decisions.
• Gold Exposure – Gold is a classic safe-haven asset, and in times like these, it does what it’s supposed to do and acts as a hedge against geopolitical risk.
• Infrastructure Investments – Tangible hard assets like utilities, pipelines, and energy infrastructure tend to hold up well during inflationary and volatile periods. These defensive investments provide stability and predictable cash flows.

We build portfolios with exactly these kinds of scenarios in mind. When uncertainty increases, we don’t panic, we execute our strategy.

Volatility Creates Opportunity

Uncertainty is uncomfortable, but it doesn’t last forever. Trade battles, policy shifts, and global tensions come and go. What matters, however, is staying focused on the bigger picture.

• We’re actively monitoring the situation and will adjust as needed.
• We’re well-prepared for continued volatility, with defensive positioning already in place.
• We’re here to provide clarity and guidance so you can stay focused on what matters, your long-term financial success.

Final Thoughts: Staying the Course Through Rough Waters

The seas may be choppy, but we’ve navigated rough waters before. This situation isn’t the first trade dispute, and it won’t be the last. What’s important is having a steady hand on the wheel and sticking to a plan built for moments like this.

If you have questions or concerns, we are here. Thank you for your continued trust; through smooth seas and stormy waters, we remain at the helm, steering with discipline and foresight.

This publication is for informational purposes only and shall not be construed to constitute any form of advice. The views expressed are those of the author alone. Opinions expressed are as of the date of this publication and are subject to change without notice and information has been compiled from sources believed to be reliable. This publication has been prepared for general circulation and without regard to the individual financial circumstances and objectives of persons who receive it. You should not act or rely on the information without seeking the advice of the appropriate professional.