Northwood on Tariffs

As everyone knows, Canadians are now in the middle of a trade war with the United States— our closest ally and largest trading partner. The situation is changing rapidly, and between writing and posting this update, there is a good chance that new developments will have occurred!

For example, as we’re writing this on Wednesday afternoon, the auto sector has been given a 30-day exemption from tariffs, and stock markets are up on both sides of the border after suffering heavy losses earlier in the week.

Rather than try to comment on the latest developments in a rapidly evolving situation, we thought it would be more useful to review how Northwood approaches investing in times of uncertainty or heightened volatility. We think there are three main things for our clients to keep in mind.

1. Don’t overreact to short-term noise:

In the space of the last week, we’ve seen Doug Ford re-elected as Premier in Ontario, a heated on-camera argument between Trump and Zelensky and the pausing of U.S. aid to Ukraine, and a full-blown trade war break out between the United States and its North American neighbours. It’s a lot to keep up with and it’s hard to know when the plates will stop spinning and how many will break. The plans we’ve built for our client families are constructed with multi-decade horizons in mind and are designed to withstand challenging periods and circumstances like the one we’re living through. Given the fluid nature of the current economic situation, the importance of not over-reacting in times of crisis/uncertainty remains critical.

2. Uncertainty and volatility can create opportunities:

We don’t believe in making dramatic shifts to long-term financial plans in the wake of dramatic economic or political news, but there are still opportunities to take advantage of in periods of uncertainty and volatility. In fact, one of the reasons we believe in using active managers for risk assets is that we believe the ability to be opportunistic in times like this is one of the ways active managers can prove their worth. Managers that can do this while also continuing to actively manage risk can help your portfolio navigate these turbulent times.

3. The long-term impact is uncertain:

Despite all of the news surrounding the first six weeks of the Trump administration, as of Wednesday afternoon, the S&P 500 is roughly flat so far in 2025. What happens from here is anyone’s guess. There are predictions that this will all be over in the space of a few days, and scenarios where we’ll still be in the middle of a damaging trade war six months from now. Trying to guess the duration of the trade war and the long-term impact it will have on economic growth and Canada/U.S. relations is not where we think we can add value. Providing our client families with the knowledge that their portfolios are designed to be resilient and to weather storms like this are one place where we think we can add value.

Over our 22-year history as a firm, Northwood has helped our clients navigate through many periods of market disruptions and economic upheaval. From the Global Financial Crisis in 2008, to the COVID pandemic in 2020, and now the trade wars of 2025, we have been there for clients and helped them remain focused on reaching their financial goals during periods of great upheaval. We know the last month has been a stressful time for many Canadians, and we consider it a privilege to be in a position to help our client families navigate it.