Why disciplined investing matters when headlines are changing quickly
Canada–U.S. trade negotiations ended over the weekend without an agreement, escalating tensions between the two countries. Negotiators appeared close to a deal before talks broke down over reported last-minute changes to the terms. The outcome will likely introduce additional uncertainty for businesses, consumers and investors on both sides of the border.
The facts
The U.S. has introduced new 50% tariffs on approximately C$28 billion of Canadian goods, including building materials, furniture, clothing, dairy products, and some sporting goods. These goods represent roughly 5% of Canada’s exports to the U.S.
Canada has announced plans to respond ‘dollar for dollar’ with tariffs of its own targeting specific areas beginning September 8. The Canadian government has also promised financial assistance to protect businesses and workers from the impact of this escalation. This fiscal assistance is intended to help cushion the effects of the latest escalation. The U.S. has warned that it would not tolerate new Canadian countermeasures, raising the risk of further tariffs on Canada. The U.S. is already escalating threats today of 50% tariffs on automobiles and parts beginning in January 2027.
Implications: Concentrated pain for targeted industries, with broader effects still uncertain
The direct impact of the tariffs amounts to less than 1% of Canadian GDP, which has the potential to negatively impact GDP growth in future periods, with impacts also felt in employment in these sectors.
The implications for monetary policy are less clear. Slower growth and greater economic slack could justify maintaining supportive interest rate settings for longer. At the same time, tariffs may add modest inflationary pressure, complicating the Bank of Canada’s decisions. To date, the Bank has generally looked through the temporary inflation effects of tariffs rather than responding mechanically to them.
Previous retaliatory tariffs did not add meaningfully to Canadian inflation at their peak. The 2025 tariffs did not prompt the Bank of Canada to increase rates in response to the inflationary threat. This story is not over, and we expect further developments as the situation evolves.
Our investment approach does not depend on predicting the outcome
Periods of geopolitical and economic uncertainty reinforce the importance of owning high-quality businesses with resilient fundamentals, sound balance sheets, durable competitive positions and a historical track record of resiliency when navigating challenging economic environments. Companies with pricing power, diversified revenue sources, flexible supply chains and experienced management teams are best equipped to navigate and adapt to these kinds of shocks.
This development may contribute to higher volatility, but short-term price movements are not the same as a permanent impairment of long-term business value. Our holdings are not immune to fluctuations; however, temporary declines do not necessarily signal a lasting deterioration in their underlying fundamentals.
Corporations on both sides of the border are generally entering this period from a position of strong fundamentals, with recent quarterly results showing very strong, broad-based double-digit corporate profit and revenue growth. Profit margins are at historically elevated and healthy levels, providing companies with greater financial flexibility to navigate this uncertainty.
We will continue to monitor trade developments closely. Our investment decisions will remain anchored in what we can assess: business quality, financial strength, valuation and portfolio fit. Diversification, disciplined security selection and alignment with each client’s objectives and risk profile are designed to help portfolios navigate an uncertain future without depending on any single political outcome.
The bottom line
Periods like this reinforce the value of a process built for uncertainty. We believe the appropriate response is not to make abrupt portfolio changes based on rapidly shifting headlines, but to remain focused on resilient businesses, sensible valuations and long-term financial goals.
Brian Durno, CFP®, CFA®
As CIO, Brian leads the organization in following a quality sector-based investment approach for all client portfolios. He joined TriCert Investment Counsel in 2016 as a Portfolio Manager, responsible for building client portfolios with a disciplined, value-oriented investment approach. Brian earned a Bachelor of Commerce degree from Queen’s University in 1995. He is a member of the CFA Institute and the CFA Society of Ottawa, a Certified Financial Planner, and a Chartered Financial Analyst charterholder.
