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Short-term market volatility<\/h4>When US president Trump imposed a 25% tariff on Canadian imports to the US on March 4, 2025, the news sent financial markets into a spin. With China and Mexico also hit by tariffs, and China and Canada both quickly responding with retaliatory tariffs, a trade war is very real possibility.<\/p>
But will tariffs affect the stock market? If so, how? In a time of market uncertainty, where do you look to find tariff-proof stocks? Keep reading to find out.<\/p>
Trump\u2019s tariffs could potentially have wide-reaching effects on the stock market and the Canadian economy as a whole. Here are some key features and factors to keep an eye out for how tariffs will affect the stock market in the weeks and months ahead.<\/p>
Short-term market volatility<\/h4>We\u2019ve already seen the introduction of tariffs rattle North American stock markets. At the close of trading on March 4, 2025, the S&P\/TSX composite index had fallen 429.57 points to 24,572 after a volatile day. The Dow Jones, S&P 500 and Nasdaq also fell the same day, while the S&P\/TSX rebounded up 298.82 points the following day.<\/p>
Analysts are predicting that investors can expect plenty more of this volatility in coming times. With uncertainty reigning over the impact tariffs will have on the Canadian and US economies and no certainty around what else the Trump administration might have in store, investors could be in for a rollercoaster ride.![\"Downward](\"https:\/\/www.finder.com\/finder-us\/wp-uploads\/sites\/5\/2025\/03\/Down-Arrow-Chart-Icon-2_Finder_500x500.png\" "\\"Image:"){kind=icon}
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If 25% tariffs remain in place for a sustained period, many analysts predict that the Canadian economy could be headed for a recession. According to analysis from Edward Jones<\/a>, with US exports representing around one-fifth of Canada\u2019s GDP, the tariffs could cause a 2.5%\u20133% decline in GDP. Unemployment and inflation levels are also expected to rise.<\/p> This has prompted analysts to suggest that a Bank of Canada interest rate cut could potentially be on the cards. Falling interest rates could potentially drive investors away from bonds and encourage investment in the stock market.<\/p> The key word for investors at the moment is uncertainty. Economists and other experts are uncertain about how long tariffs will be in place, and there\u2019s also plenty of uncertainty around future changes to US and Canadian trade policy.<\/p> At the same time, it\u2019s worth remembering that short-term volatility is common for stock markets. Rather than getting caught up in the drama of daily headlines and market fluctuations, it\u2019s important to keep an eye on your long-term financial goals.<\/p> The US\u2019s 2018-19 trade war with China during Trump\u2019s first presidency affected markets in the short-term, but the S&P 500 still gradually rose over the long term right up until the Covid pandemic hit.<\/p>![\"helping](\"https:\/\/www.finder.com\/finder-us\/wp-uploads\/sites\/5\/2018\/05\/helping-hand-icon_Finder_500x500.png\" "\\"Image:"){kind=icon}
Long-term outlook<\/h4>