{"id":1061509,"date":"2025-07-15T16:09:28","date_gmt":"2025-07-15T20:09:28","guid":{"rendered":"https:\/\/www.finder.com\/ca\/?p=1061509"},"modified":"2025-10-14T17:49:02","modified_gmt":"2025-10-14T21:49:02","slug":"canada-trade-war","status":"publish","type":"post","link":"https:\/\/www.finder.com\/ca\/stock-trading\/canada-trade-war","title":{"rendered":"What does the trade war mean for Canada and your portfolio?"},"content":{"rendered":"

When US president Trump announced sweeping \u201cLiberation Day\u201d tariffs in early April 2025, global stock markets plummeted. And as the effects of the Trump administration\u2019s policies continue to impact the Canadian economy and countries around the world, the future looks uncertain for investors.<\/p>

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\u2019s find out.<\/p>

What is a trade war?<\/h3>

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.<\/p>

When one country implements protectionist trade policies \u2014 like imposing tariffs on imports and import quotas \u2014 the other country responds with retaliatory measures of its own. When this \u201ctit-for-tat\u201d escalation continues, it leads to a prolonged trade war and the potential for a wide range of economic consequences.<\/p>

What is the US vs Canada trade war?<\/h3>

\"Flag \"US<\/p>

The US\u2013Canada 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%.<\/p>

The reason for the tariffs, according to the Trump administration, was to combat illegal immigration and drug trafficking, and to promote domestic manufacturing.<\/p>

The US tariffs came into effect on March 4, and Canada\u2019s retaliatory 25% tariffs on US goods began the same day. Prime Minister Justin Trudeau said there was no justification for the Trump administration\u2019s actions.<\/p>

\u201cOur tariffs will remain in place until the US trade action is withdrawn, and, should US tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures,\u201d prime minister Trudeau said in a statement. \u201cWhile 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.\u201d<\/p>

Timeline of the US vs Canada trade war<\/h4>

February 1, 2025<\/strong> \u2014 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.<\/p>

February 3, 2025<\/strong> \u2014 Trump announces a one-month pause on the tariffs after Canada and Mexico both agree to strengthen border controls.<\/p>

March 4, 2025<\/strong> \u2014 US tariffs on goods from Canada and Mexico take effect. 25% Canadian retaliatory tariffs on $30 billion of US goods also take effect.<\/p>

March 6, 2025<\/strong> \u2014 The US temporarily pauses tariffs on United States-Mexico-Canada Agreement-compliant goods until April 2.<\/p>

March 12, 2025<\/strong> \u2014 25% US tariffs on steel and aluminum imports come into effect. Canada announces retaliatory tariffs.<\/p>

April 2, 2025<\/strong> \u2014 Trump announces his \u201cLiberation Day\u201d tariffs, but Canada is excluded from a range of \u201creciprocal tariffs\u201d.<\/p>

April 3, 2025<\/strong> \u2014 25% US tariffs on auto imports take effect.<\/p>

April 9, 2025<\/strong> \u2014 Canada\u2019s 25% retaliatory tariffs on non-USMCA-compliant autos come into effect.<\/p>

April 15, 2025<\/strong> \u2014 Canada issues a 6-month pause on tariffs for US goods that are used in Canadian manufacturing, processing and food and beverage packaging.<\/p>

June 4, 2025<\/strong> \u2014 US tariffs on foreign steel and aluminum (except from the UK) increase to 50%.<\/p>

June 16, 2025<\/strong> \u2014 Canada and the US announce that they plan to strike a trade deal in the next 30 days.<\/p><\/div><\/article>

What is the US vs China trade war?<\/h3>

\"US \"China
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.<\/p>

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.<\/p>

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.<\/p>

Timeline of the US vs China trade war<\/h4>

February 4, 2025<\/strong> \u2014 The US announces a 10% tariff on Chinese goods.<\/p>

February 10, 2025<\/strong> \u2014 China\u2019s 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.<\/p>

March 4, 2025<\/strong> \u2014 US introduces additional 10% tariffs on China.<\/p>

March 10, 2025<\/strong> \u2014 China retaliates with 10-15% tariffs on US agricultural imports.<\/p>

March 12, 2025<\/strong> \u2014 25% US tariffs on steel and aluminum imports come into effect.<\/p>

April 2, 2025<\/strong> \u2014 Trump\u2019s \u201cLiberation Day\u201d announcement increases tariffs on China to 34%.<\/p>

April 2, 2025<\/strong> \u2014 China announces a 34% tariff on US goods.<\/p>

April 9, 2025<\/strong> \u2014 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%.<\/p>

April 11, 2025<\/strong> \u2014 China increases tariffs on US goods to 125%.<\/p>

May 12, 2025<\/strong> \u2014 After talks in Geneva, both countries agree to reduce their tariffs for 90 days.<\/p>

June 5, 2025<\/strong> \u2014 Trump and Chinese President Xi Jinping hold a direct phone call.<\/p>

June 10, 2025<\/strong> \u2014 The US and China announce that they have agreed \u201cin principle\u201d to the framework for a trade deal.<\/p><\/div><\/article>

What is the Canada vs China trade war?<\/h3>

\"China \"Flag
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.<\/p>

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. \u201cThe Canadian government is engaging with its Chinese counterparts at the ministerial level and we\u2019ll continue those discussions,\u201d Carney told reporters. \u201cThey\u2019re a top priority for us.\u201d<\/p>

Timeline of the Canada vs China trade war<\/h4>

October 2024<\/strong> \u2014 Canada announces a 100% tariff on Chinese electric vehicles as well as a 25% tariff on Chinese steel and aluminum products.<\/p>

March 2025<\/strong> \u2014 China imposes a 100% tariff on Canadian canola oil, oil cakes and pea imports, and a 25% tariff on Canadian aquatic products and pork.<\/p>

June 2025<\/strong> \u2014 Canadian prime minister Mark Carney announces discussions between Canada and China to address the trade war.<\/p><\/div><\/article>

What has been the fallout from the trade war?<\/h3>

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 \u2014 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\u2019s trading partners, with exports to the US dropping 10 percentage points to 68% from May 2024 to May 2025.<\/p>

And there could be more fallout to come. \u201cA long-lasting trade war poses the greatest threat to the Canadian economy,\u201d said Bank of Canada governor Tiff Macklem in a May statement. \u201cIt also increases risks to financial stability.\u201d<\/p>

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 \u201ca 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.\u201d<\/p>

How has the trade war impacted stock markets?<\/h3>

If there\u2019s one word to sum up the impact the trade war has had on stock markets, it\u2019s \u201cvolatility\u201d.<\/p>

When tariffs kicked off in earnest after Trump\u2019s \u201cLiberation Day\u201d 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.<\/p>

There were similar sell-offs in markets around the world, and the S&P\/TSX Composite Index fell from 25,307 to 22,506.<\/p>

Leading global stock indices have since recovered, with the S&P\/TSX Composite Index above 26,900 as of July 2025, but it\u2019s 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.

\n
\nDive deeper: <\/span>Best Canadian stocks to buy right now<\/a>\n<\/div>\n<\/article><\/p>

Strategies to manage your investment portfolio during a trade war<\/h3>

Here are some common strategies to help you ride out the uncertainty and volatility of a trade war.<\/p>

Diversify your portfolio<\/h4>

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.<\/p>

Put simply, it\u2019s 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.<\/p>

Learn more in our guide to how tariffs will affect the stock market<\/a>.<\/p>

Look for resilient stocks<\/h4>

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.<\/p>

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.<\/p>

Finally, there\u2019s 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<\/a> can be an important part of a balanced portfolio.

\n
\nRelated: <\/span>Best defense stocks in Canada<\/a>\n<\/div>\n<\/article><\/p>

Think long-term<\/h4>

In times of turbulence, it\u2019s easy to fall into the trap of panic selling. This is usually a bad idea.<\/p>

Take a look back at historic price charts of leading financial markets around the world and you\u2019ll see that while prices might fall in the short-term, there are gains to be made if you\u2019re willing to ride out the volatility.<\/p>

That\u2019s why it\u2019s 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.<\/p>

Consider dividend stocks<\/h4>

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\u2019s a prolonged trade war, providing an extra layer of financial protection. Learn more in our guide to the best dividend stocks<\/a>.

\n
\nDive deeper: <\/span>Best stock trading apps in Canada<\/a>\n<\/div>\n<\/article><\/p>

Compare trading platforms in Canada<\/h3>
\n
\n <\/div>\n
\n
\n