When US president Trump announced sweeping “Liberation Day” tariffs in early April 2025, global stock markets plummeted. And as the effects of the Trump administration’s policies continue to impact the Canadian economy and countries around the world, the future looks uncertain for investors.
So as the trade war rages on, what does it mean for your investment portfolio? And in times of market volatility, what can you do to ride out the uncertainty? Let’s find out.
What is a trade war?
A trade war is an economic conflict or dispute between countries. It occurs when nations try to protect their economies from foreign competitors or try to combat what they perceive as the unfair trade policies of other countries.
When one country implements protectionist trade policies — like imposing tariffs on imports and import quotas — the other country responds with retaliatory measures of its own. When this “tit-for-tat” escalation continues, it leads to a prolonged trade war and the potential for a wide range of economic consequences.
What is the US vs Canada trade war?
The US–Canada trade war began in February 2025 when US President Trump announced a blanket 25% tariff on Canadian and Mexican imports. The only exception was Canadian energy products, which would be taxed at a lower rate of 10%.
The reason for the tariffs, according to the Trump administration, was to combat illegal immigration and drug trafficking, and to promote domestic manufacturing.
The US tariffs came into effect on March 4, and Canada’s retaliatory 25% tariffs on US goods began the same day. Prime Minister Justin Trudeau said there was no justification for the Trump administration’s actions.
“Our tariffs will remain in place until the US trade action is withdrawn, and, should US tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures,” prime minister Trudeau said in a statement. “While we urge the US administration to reconsider their tariffs, Canada remains firm in standing up for our economy, our jobs, our workers, and for a fair deal.”
Timeline of the US vs Canada trade war
February 1, 2025 — US president Trump announces tariffs of 25% on goods imported from Canada and Mexico, with the exception of Canadian oil and energy, which would be taxed at a lower rate of 10%. In response, then Canadian prime minister Justin Trudeau announced retaliatory 25% tariffs on US products.
February 3, 2025 — Trump announces a one-month pause on the tariffs after Canada and Mexico both agree to strengthen border controls.
March 4, 2025 — US tariffs on goods from Canada and Mexico take effect. 25% Canadian retaliatory tariffs on $30 billion of US goods also take effect.
March 6, 2025 — The US temporarily pauses tariffs on United States-Mexico-Canada Agreement-compliant goods until April 2.
March 12, 2025 — 25% US tariffs on steel and aluminum imports come into effect. Canada announces retaliatory tariffs.
April 2, 2025 — Trump announces his “Liberation Day” tariffs, but Canada is excluded from a range of “reciprocal tariffs”.
April 3, 2025 — 25% US tariffs on auto imports take effect.
April 9, 2025 — Canada’s 25% retaliatory tariffs on non-USMCA-compliant autos come into effect.
April 15, 2025 — Canada issues a 6-month pause on tariffs for US goods that are used in Canadian manufacturing, processing and food and beverage packaging.
June 4, 2025 — US tariffs on foreign steel and aluminum (except from the UK) increase to 50%.
June 16, 2025 — Canada and the US announce that they plan to strike a trade deal in the next 30 days.
What is the US vs China trade war?
The US-China trade war can trace its roots back to January 2018, when the first Trump administration imposed tariffs on China, citing unfair trade practices. China soon retaliated, the US introduced more tariffs, and the trade war lasted throughout 2018 and into 2019. The two countries came to a limited agreement in 2020, but many tariffs and restrictions remained in place during the Biden administration.
During the 2024 election campaign, Trump proposed a 60% tariff on Chinese goods. He then introduced a tariff of 10% in February 2025, and China was quick to respond with levies of its own. Tit-for-tat measures eventually resulted in the US imposing 145% tariffs on Chinese goods, and China retaliating with 125% tariffs on US goods.
Eventually, the two countries negotiated and agreed to roll back their tariffs in May, and by June it was announced that they had reached a new agreement to de-escalate trade tensions.
Timeline of the US vs China trade war
February 4, 2025 — The US announces a 10% tariff on Chinese goods.
February 10, 2025 — China’s retaliatory 15% tariffs on US coal and liquefied natural gas and 10% tariffs on crude oil and agricultural machinery, large displacement cars and pickup trucks come into effect.
March 4, 2025 — US introduces additional 10% tariffs on China.
March 10, 2025 — China retaliates with 10-15% tariffs on US agricultural imports.
March 12, 2025 — 25% US tariffs on steel and aluminum imports come into effect.
April 2, 2025 — Trump’s “Liberation Day” announcement increases tariffs on China to 34%.
April 2, 2025 — China announces a 34% tariff on US goods.
April 9, 2025 — The US announces an additional 84% tariff on Chinese goods. China responds with retaliatory tariffs of its own, and Trump then increases the total tariffs on China to 145%.
April 11, 2025 — China increases tariffs on US goods to 125%.
May 12, 2025 — After talks in Geneva, both countries agree to reduce their tariffs for 90 days.
June 5, 2025 — Trump and Chinese President Xi Jinping hold a direct phone call.
June 10, 2025 — The US and China announce that they have agreed “in principle” to the framework for a trade deal.
What is the Canada vs China trade war?
Amid global trade tensions, Canada and China have also found themselves at odds. Canada first imposed tariffs in 2024 to tackle unfair competition from China. Canada targeted electric vehicles, steel and aluminum, while China soon responded with tariffs on Canadian agricultural exports.
The trade war remains ongoing, but in June 2025 Canadian prime minister Mark Carney announced that the 2 countries were working to resolve their issues. “The Canadian government is engaging with its Chinese counterparts at the ministerial level and we’ll continue those discussions,” Carney told reporters. “They’re a top priority for us.”
Timeline of the Canada vs China trade war
October 2024 — Canada announces a 100% tariff on Chinese electric vehicles as well as a 25% tariff on Chinese steel and aluminum products.
March 2025 — China imposes a 100% tariff on Canadian canola oil, oil cakes and pea imports, and a 25% tariff on Canadian aquatic products and pork.
June 2025 — Canadian prime minister Mark Carney announces discussions between Canada and China to address the trade war.
What has been the fallout from the trade war?
The Trump trade war has impacted the Canadian economy in multiple ways. Unemployment increased to 7% in May 2025, while grocery prices have also risen — the Consumer Price Index (CPI) rose 1.7% on a year-over-year basis in May, following a 1.7% increase in April. The tariffs have also increased the diversity of Canada’s trading partners, with exports to the US dropping 10 percentage points to 68% from May 2024 to May 2025.
And there could be more fallout to come. “A long-lasting trade war poses the greatest threat to the Canadian economy,” said Bank of Canada governor Tiff Macklem in a May statement. “It also increases risks to financial stability.”
In the short term, the Bank of Canada believes the uncertainty around US policy could lead to more market volatility and liquidity issues. In the longer term, Macklem said “a prolonged global trade war would have severe economic consequences. It would reduce growth and increase unemployment. This could, in turn, have important ramifications for our financial system.”
How has the trade war impacted stock markets?
If there’s one word to sum up the impact the trade war has had on stock markets, it’s “volatility”.
When tariffs kicked off in earnest after Trump’s “Liberation Day” announcement, the US stock market lost more than US$6 trillion in 2 trading days. In fact, markets saw their worst day since the Covid pandemic in March 2020.
There were similar sell-offs in markets around the world, and the S&P/TSX Composite Index fell from 25,307 to 22,506.
Leading global stock indices have since recovered, with the S&P/TSX Composite Index above 26,900 as of July 2025, but it’s been a bumpy ride for investors in recent months. With tariff announcements, retaliatory measures and plenty of bluff, bluster and backflips from US president Trump, plenty of uncertainty remains.
Strategies to manage your investment portfolio during a trade war
Here are some common strategies to help you ride out the uncertainty and volatility of a trade war.
Diversify your portfolio
Diversifying your portfolio is Investing 101. It allows you to limit your exposure to risk in any single category, helping to provide protection against market downturns.
Put simply, it’s about not putting all your eggs in one basket. So rather than investing solely in Canadian companies, you can diversify across multiple geographical regions. Rather than focusing solely on tech stocks, you can invest across a variety of sectors. And instead of just holding stocks, you can also consider ETFs, bonds, GICs and other investments.
Resilience is a key quality to look for when choosing stocks during a trade war. Companies with strong fundamentals and that focus on essential services that are always in high demand, like consumer staples and healthcare, are often a safe choice.
You may also need to look for companies that are less likely to be affected by global trade disruptions. So companies with strong local operations, or those with diversified supply chains that are unlikely to be heavily impacted by trade restrictions, may be worth a look.
Finally, there’s the asset that has long been seen as a safe haven for investors: gold. Gold offers protection against inflation and a reliable store of value, so gold mining stocks and ETFs can be an important part of a balanced portfolio.
In times of turbulence, it’s easy to fall into the trap of panic selling. This is usually a bad idea.
Take a look back at historic price charts of leading financial markets around the world and you’ll see that while prices might fall in the short-term, there are gains to be made if you’re willing to ride out the volatility.
That’s why it’s often a smart strategy to avoid getting sucked into the doom and gloom surrounding tariffs and trade wars. Instead, keep your long-term financial goals in mind, and remember that your investment time frame is probably a lot longer than any brief market dips.
Consider dividend stocks
You can also consider investing in stocks that have a history of paying high dividends. These stocks can provide a passive source of income even if there’s a prolonged trade war, providing an extra layer of financial protection. Learn more in our guide to the best dividend stocks.
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With the volatility brought about by heightened trade tensions, you may be thinking of looking beyond traditional assets like stocks and bonds to alternatives like cryptocurrency.
Unfortunately, crypto prices haven’t escaped the impact of tariffs and trade conflict either. In times of uncertainty, investors often look to sell off high-risk assets — and assets don’t get much more high-risk than crypto.
Cryptocurrencies after all are notoriously volatile, so there’s the potential for big losses if the market turns against you. You only have to check recent crypto price charts to see that when Trump announced his “Liberation Day” tariffs, many popular cryptocurrencies experienced substantial price falls.
But there are possible exceptions, most notably Bitcoin. The world’s largest crypto is seen by some investors as a store of value and a useful hedge against inflation, which sometimes sees it referred to as “digital gold”. So if you’re looking for an asset to provide protection against potential stock market volatility, you might want to look into buying BTC.
Learn more about buying crypto in our guide to the best crypto exchanges.
Trade wars and tariffs lead to market volatility, and they have the potential to cause serious economic consequences over the long-term. But it’s not all doom and gloom for investors.
FAQs about trade wars and what they mean for you
The United States is Canada's largest trading partner. In 2023, 73% of Canadian exports went to the USA, while the US also accounted for over 53% of imports to Canada.
Yes, Canada is in a trade war with China. In October 2024, Canada followed the USA and European Union by imposing a 100% tariff on Chinese electric vehicles. An extra 25% tariff on Chinese steel and aluminum products was announced the same month. China responded in March 2025 by imposing tariffs on a range of Canadian agricultural products.
There are lots of factors to consider when choosing an online brokerage. Look for a broker that charges low or no commissions, that provides access to the assets and markets you want to trade, and that offers user-friendly online and mobile trading platforms. You might also want to look for the best brokerage signup bonuses. Learn more in our guide to the 10 best trading platforms and apps.
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Tim Falk is a freelance writer for Finder. Over the course of his 15-year writing career, he has reported on a wide range of personal finance topics. Whether you're investing in stocks and ETFs, comparing savings accounts or choosing a credit card, Tim wants to make it easier for you to understand. When he’s not staring at his computer, you can usually find him exploring the great outdoors.
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