Global stock markets were rocked on Monday after U.S. President Donald Trump made official on the weekend hefty new 25–per-cent tariffs on imports from Canada and Mexico - and 10 per cent on China. The president also said tariffs on the European Union would likely be next.
After a steep selloff early in the day, North American indexes pared some losses amid reports that Trump paused new tariffs on Mexico for one month.
The uncertainty has investors wondering if and how to reposition their portfolios in preparation for what could come next.
The Globe spoke to Canadian money managers on Monday about their take on the tariffs, sectors that could be hit hardest, and advice for investors:
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Brianne Gardner, senior wealth adviser and co-founder of Velocity Investment Partners at Raymond James Ltd.
Tariff impact on economy and markets: If the tariffs are temporary and are being used as a negotiation tactic, as it seems with the deferment of the Mexico tariffs, then they will have less of an impact. If they stay on longer-term and at meaningful levels, it will have a severe impact on the Canadian economy and Canadian businesses, as well as on the U.S. and international countries. Inevitably, inflation is likely to either flatline or tick higher in the short term. This will be a huge challenge for central banks, which want to cut rates to stimulate the economy but might be unable to because of inflationary pressures.
Canadian sector(s) most impacted: Energy, forestry and industrials – particularly the automotive sector, but many other industrials also have significant cross-border trade. Mining and materials could be impacted as well if Canada places restrictions on exports of important resources. If companies can’t sell to certain customers, their profitability could drop, along with their stock process.
Canadian sector(s) least impacted: Canadian technology, telecommunications and utilities
Making any tariff-related portfolio changes? We already started making shifts months ago, and even last week, we raised some cash, noting that uncertainty and volatility were ahead. We had already made trades to have more U.S. exposure to insulate our portfolios from the impact of a trade war and a weaker loonie since our outlook for 2025 was more bullish on the U.S. economy versus Canada, where we have some concerns. We will increase international exposure once some of the uncertainty is removed. Once the Canadian dollar and Canadian stock market have taken enough of a hit, we will likely shift back into Canada, picking up high-quality companies. We will get defensive and raise more cash if conditions worsen. For now, we need to see how these negotiations play out a little more. If there is a conclusion to them, and Trump takes off or reduces the tariffs, we should see a rebound.
Stocks you own that you think are resilient to tariffs: Most of our U.S. stocks will be insulated, which is the majority of our current portfolio. Our Canadian telecoms and utilities should be resilient. Our Canadian insurance stocks, such as Sun Life Financial Inc. (SLF-T), shouldn’t see any impact. Our materials positions, like Wheaton Precious Metals Corp. (WPM-T), should benefit from the increase in gold prices. Our BMO India Equity Index ETF (ZID-T) is likely to benefit from this as well.
Advice for investors: Don’t make emotional trades based on how you feel about a person, politician or the headlines. Stay informed and listen to reliable, trusted reports. It’s important to use rules and data to manage your investments and not rely on gut feelings!
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Craig Jerusalim, senior portfolio manager at CIBC Asset Management in Toronto
Tariff impact on economy and markets: Equity markets dislike uncertainty - and that is what we now have in spades. If a more compromising tariff deal isn’t renegotiated within a few short months, it will likely lead to a drastic slowdown in economic growth in Canada, an acceleration of job losses, a much weaker Canadian dollar and ultimately, a recession. It will take a lot longer for those impacts to be felt broadly in the U.S., with only certain pockets more acutely impacted.
Canadian sector(s) most impacted: Manufacturers and transport companies that focus on cross-border trade are the obvious sectors immediately impacted. However, initially, very few sectors will be spared, especially since nervous investors sell what’s liquid and what they can sell in addition to what they want to sell.
Typically, during downturns, haven sectors such as telecommunication, grocers, REITs and banks tend to be resilient. However, this time, the stress on the Canadian consumer combined with slower population growth and the weaker Canadian dollar leaves those sectors much more vulnerable relative to companies that generate sales in the U.S. and overseas. This variance is especially perceptible when those sales are translated back into Canadian dollars on more favourable terms. Technology is one sector that could outperform once we get past the initial step lower, especially if interest rates move lower.
Making any tariff-related portfolio changes? We have been taking President Trump seriously and have already positioned our portfolio for long-term secular growers that are generally less impacted by tariffs. While we are not anticipating any wholesale changes to our portfolio this week, market disruptions should be strategically used to the advantage of our patient, long-term, focused approach. We will stick to our process and look for relative trades that will enhance our portfolio and improve the expected risk versus return profile of our investments. On the margin, we had been shifting exposure from oil to gas and from banks to insurance to insolate from tariff risks.
Stocks you own that you think are resilient to tariffs: The Brookfield group of compnies, Shopify Inc. (SHOP-T), Thomson Reuters Corp. (TRI-T), Constellation Software Inc. (CSU-T)
Advice for investors: Market disruptions like the one we are experiencing today tend to provide excellent buying opportunities. The only mistake that a long-term investor can really make is selling high-quality companies at their lows and not being well positioned for the eventual rebound.
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Jason Donville, president and chief executive officer of Donville Kent Asset Management Inc. in Toronto.
Tariff impact on economy and markets: The stock market has reacted emotionally with a shoot first and ask questions later mentality. An interesting counterpoint to the initial negative reaction is that the weakness in the Canadian dollar improves the profitability of many of our investments, which have significant revenue in U.S. dollars, aren’t in tariffed industries and whose stocks trade in Canadian dollars.
Another notable point is that Canadian interest rates are forecast to decline significantly faster than just a few weeks ago. Tariffs are economically inefficient, pretty much like any time the government inserts itself into economics, but declining rates and a declining Canadian dollar muddy the waters on how tariffs will actually impact stock prices, especially for stocks without tariffed products or services.
Sector(s) most affected? least affected? We like technology and services. Both industries have tended to be unaffected by tariffs so far. We would avoid natural resources and export industries generally. We think companies like Zedcor Inc. (ZDC-X), Enterprise Group Inc. (ET-T) and Vitalhub Corp. (VHI-T) are well positioned going forward as there is very little in the form of cross-border trade in any of their business models. We also think a company like Constellation Software Inc. (CSU-T), which is a global business headquartered in Canada, will be unaffected.
Making any tariff-related portfolio changes? The first thing we did heading into this new administration was go through each of our investments one-by-one to assess the potential impact of tariffs. The fact that we focus on knowledge-based industries and services businesses provides a lot of protection against tariff risk. We aren’t making any major changes to our portfolio today.
Advice for investors: Remember, the stock market is not the economy. Canada will weather this storm.
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Rebecca Teltscher, portfolio manager at Newhaven Asset Management Inc. in Toronto
Tariff impact on economy and markets: Tariffs will negatively impact the Canadian, U.S. and global economies. If Canada exports fewer goods to the U.S., there will be a negative impact on Canada’s employment and GDP. If the U.S. pays a higher price for goods, this will have an inflationary impact, causing lower consumption of goods from all over the world. There is a higher probability of a recession in Canada; however, there will be pain on both sides of the border should tariffs remain intact for an extended period of time.
Canadian sector(s) most impacted: Any Canadian company that actively exports or manufactures to the U.S. would be the most impacted. Many of these companies are private; therefore, we may see more of a Main Street economic impact relative to a stock market impact in the short term. However, many secondary impacts would affect the stock market, including transport companies (trucking and rails), as extended tariffs will reduce the amount of goods crossing the border.
Least impacted sectors: Telecommunications and utilities will most likely not be materially impacted by tariffs.
Making any tariff-related portfolio changes? No. We will be looking carefully for opportunities in companies that have rock-solid long-term prospects that are trading down on short-term news.
Stocks you own that you think are resilient to tariffs: BCE Inc. (BCE-T), Telus Corp. (T-T), Emera Inc. (EMA-T) and Fortis (FTS-T) would be examples of very conservative names that we own that represent critical infrastructure with stable revenues that should not be heavily impacted.
Advice for investors: Patience is an undervalued and underutilized quality when investing today.
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Bryden Teich, chief investment officer at Avenue Investment Management Inc. in Toronto
Tariff impact on economy and markets: The tariffs are coming at a time when the economy is at a greater risk of a slowdown, which creates a bigger risk of an economic contraction. The business cycle is slowing, interest rates have contributed to tighter financial conditions, and now adding tariffs creates a higher cost for businesses and consumers at a time when incomes are not growing.
Canadian sector(s) most impacted: Manufacturing.
Making any tariff-related portfolio changes? No. We’re sticking with our high-quality companies we believe can manage through challenging economic times.
Advice for investors: Stick to your investment plan. The tariff situation will likely last for a while, so be prepared to manage your emotions during this uncertainty.
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Paul Harris, partner and portfolio manager at Harris Douglas Asset Management Inc. in Toronto
Tariff impact on economy and markets: The North American markets have been so integrated since the North American Free Trade Agreement was signed, especially on the supply chain side, that this is not good for anyone. Yes, it will have more impact on Canada and Mexico, but tariffs will eventually hurt the U.S. as well. Both the U.S. and Canadian currencies countries are adjusting to this news, which is dampening some of the effects.
Canadian sector(s) most impacted: I think most sectors will impacted, but industrials, resources and any export-oriented sectors will be hit the hardest.
Making any tariff-related portfolio changes? No, we increased our cash position to 10 per cent from 6.5 per cent at the end of 2024 (after selling a stock) and will look for opportunities to buy companies that we believe have been oversold.
Advice for investors: Look for opportunities to buy good companies
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Jason Del Vicario, portfolio manager with Hillside Wealth Management at iA Private Wealth Inc. in Vancouver
Tariff impact on economy and markets: All things being equal, if you make things more expensive, even artificially via tariffs, then the cost of items should rise, leading to a rise in inflation. Tariffs may also lead to people sourcing items internally or from others who aren’t affected by tariffs, which could lead to supply chain issues, not unlike the pandemic. Lastly, historically speaking, the track record of tariffs is not strong, and they generally lead to unintended consequences.
Making any tariff-related portfolio changes? No. We believe in owning a concentrated portfolio of exclusively high-quality global companies and holding them for the long term. We accept we will encounter all sorts of issues beyond our control during this time. Short of a global nuclear war, where money won’t have any meaning, we don’t see any issues, past, present or future, requiring us to change our behaviour.
Stocks you own that you think are resilient to tariffs: We don’t think like this, but I would say that the global businesses we own such as Alimentation Couche-Tard Inc. (ATD-T), Constellation Software Inc. (CSU-T), Meta Platforms Inc. (META-Q) and Microsoft Corp. (MSFT-T) may be most resilient as they have customers, operations and staff globally so in theory their business models are more diversified.
Advice for investors: Chill out; this will pass. Spend your time with people you enjoy doing things you enjoy.
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Ryan Lewenza, senior financial adviser and senior portfolio manager, private client group with Turner Investments at Raymond James Ltd. in Toronto
Tariff impact on economy and markets: Tariffs will be negative for the U.S and global economies as the additional tariffs will be passed on to consumers and inflation will almost surely rise. This could then force the U.S. Federal Reserve and central banks to reverse course and look to hike interest rates. This would then be bad for the economy and markets. We hope President Trump will come to his senses and reverse course, as tariffs could impact everyone, not just the countries in which he’s applying tariffs. Canada’s economy will be hit harder, given we’re an exporting nation. So Canada would likely experience a recession. But that doesn’t mean the TSX is doomed. The Bank of Canada will likely cut rates more, which, given that we have a lot of interest-sensitive industries like banks, REITs, and telecom, could help those specific areas.
Canadian sector(s) most impacted: Companies that manufacture goods and importers will be hurt but other areas could benefit.
Making any tariff-related portfolio changes? As far as our portfolio goes, we’re overweight U.S. stocks. We might increase our cash position if the tariffs remain.
Stocks you own that you think are resilient to tariffs: We like REITs right now so we like and hold the BMO Equal Weight REIT ETF (ZRE-T). These companies are more domestically based, so they are less impacted by tariffs and stand to benefit from more Bank of Canada rate cuts
Advice for investors: Don’t overreact and make any major changes. We’ll get through this like we always do.
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Maili Wong, senior wealth adviser and senior portfolio manager with The Wong Group at Wellington-Altus Private Wealth Inc. in Vancouver
Tariff impact on economy and markets: The imposition of tariffs by the U.S. on Canadian goods is expected to have widespread economic consequences. For Canada, these tariffs could impact demand for Canadian-produced goods, as they are subject to tariffs in the U.S., making these goods potentially less competitive than those produced locally in the U.S. The counter-tariffs imposed by Canada could also lead to increased costs for Canadian businesses and consumers - and both could potentially slow economic growth in Canada. In the U.S., American consumers may experience higher costs for imported goods, leading to increased prices and potential disruptions in supply chains. Globally, these tariffs could trigger retaliatory measures from other countries, leading to a broader trade war that could dampen global economic growth. However, it’s important to remember that markets are resilient and often find ways to adapt to new realities.
Canadian sector(s) most impacted: Industrial manufacturing, particularly the auto sector, energy and agriculture, given their significant trade relationships with the U.S. and other countries.
Canadian sector(s) less affected: Utilities and pipelines, consumer staples and health care since they’re less reliant on cross-border trade and more driven by domestic demand and innovation.
Making any tariff-related portfolio changes?
Over the past few years, we have reduced our Canadian equity exposure in favour of U.S. equities, and client portfolios have benefitted from this positioning in both the U.S. equities and the U.S. dollar currency strength. Given the current market conditions and the potential impact of tariffs, we continue to maintain a diversified approach to asset allocation, which includes fixed income to provide stability and income in a potentially volatile market. Cash positions are being maintained at neutral levels to ensure liquidity and flexibility to take advantage of market opportunities as they arise to potentially buy high-quality equities “on-sale.”
Advice for investors: Stay calm and stay invested. The biggest mistake investors make is moving to the sidelines when they’re worried about election results, geopolitical events or volatility in the markets. It leads them to take short-term views that can be detrimental to their investment results.
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Anil Tahiliani, senior portfolio manager at Matco Financial Inc. in Calgary
Tariff impact on economy and markets: If the tariffs last for six months or longer, a recession in Canada is likely and the Bank of Canada will likely continue interest rate cuts. If tariffs are implemented on other trading partners and they reply with tariffs to the same degree (25 per cent), we’re likely to see recessions in other countries, including the U.S. Global markets would panic and likely swoon 15 to 30 per cent depending on whether the market believes that the tariffs are real or just a negotiating tactic.
Canadian sector(s) most impacted: Auto parts, lumber, steel, aluminum, aerospace, rails, food manufacturing, select apparel retailing and energy.
Canadian sector(s) least impacted: Gold and silver, technology, telecommunications, select real estate and select industrials.
Making any tariff-related portfolio changes? No. We would use any further market correction as a buying opportunity to average into the market.
Advice for investors: Don’t panic sell! Re-visit your asset allocation and stock selection and use cash to average into the market over the next month.
More to come