Markets Up Post-US Election, Tariffs Could Hurt Canada: Advisor

The markets are looking positive coming off the news that Donald Trump will be back in the White House, according to Andrew Rodych, partner of PWM Private Wealth Counsel, and Registered Portfolio Manager with Q Wealth Partners.

“We’re seeing lots of green across the board,” he said.

But looking ahead, Rodych said Canadians will have to “wait and see” what the economic impact will be for Trump’s “protectionist” stance on U.S.A. trade.

Previously, Trump has promised to introduce a universal 10 per cent tariff on all American imports.

“That could lead through to things like inflation and other economic risks, especially when we look at our Canadian export market,” Rodych said, adding that oil, gas, and automotive factoring are most likely to be impacted.

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According to a report released by the Canadian Chamber of Commerce last month, those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.

Rodych said to understand the impact, the types of tariffs being imposed need to be assessed-whether they apply universally and how they relate to the United States-Mexico-Canada Agreement (USMCA) trade deal signed during Donald Trump’s first term, which replaces the North American Free Trade Agreement (NAFTA) between the U.S.A., Canada and Mexico.

“Certainly, there is a risk that tariffs if they are implemented, there could be inflationary pressures on the US. There could be ripple effects on the Canadian economy as well,” said Rodych.

Rodych explained that when looking at Trump’s first term as president, there were fears that Canada could face harsh tariffs, but most of the “worst-case scenarios” didn’t fully materialize.

Rodych said tariffs on aluminum and steel were imposed and the impact was less severe than expected. He noted the USMCA trade deal helped boost trade with Canada and the U.S.A., citing a report that it has grown 46 per cent since its implementation in 2020.

Another trend coming from election night is the strengthening of the U.S.A. dollar, which in turn could mean the Canadian dollar is in for a weakening cycle.

His advice to individual investors is to avoid being distracted by short-term political shifts, to focus on long-term strategies, and to not put all your investments in one area.

“What happens is one election cycle does not determine the entire direction of the economy,” he said.

— with files from The Canadian Press