COLUMN: Ask the Money Lady – Trump tariffs and investments

Dear Money Lady Readers: I have had many emails from Canadians wondering what to do with their investments if Trump enforces his tariffs on Canada in February.

Tariffs on Canada, I believe is a forgone conclusion, however we must remember that the Canadian stock market tends to be manipulated more by the global economy not just by the U.S. We shouldn’t expect a rapid fall like we witnessed with COVID. What is more likely, is that we will go into a recession and retail stock picks will be the hardest hit. If you are invested in a long term financial plan using dividend blue chip stock, I would probably suggest you stay the course. Why not use the anticipated downward swings as buying opportunities to beef-up your portfolio with good securities that will go higher after we come out of this economic funk (perhaps in three to four). Since this tariff ban is aimed at Canada and Mexico let’s look at the numbers together.

Trade between the U.S. and Canada is worth over $910 billion per year. Exports to the U.S average $428 billion and imports from the U.S average $482 billion. (Office of the United States Trade Representative 2024).

Trade between the U.S. and Mexico is worth approximately $865 billion per year. Exports to the U.S. average $362 billion and imports from the U.S. were $493 billion. (Office of the United States Trade Representative 2024)

Clearly a lot of money on the table, right? So, while we wait for the politicians and economists to work it out, we all must deal with the aftermath and potential upcoming changes to our finances. So how best can we handle a looming recession? Recessions are a fact of life, you are bound to go through a couple of them during your lifetime, so here are the top three tips to weather this economic storm.

1. Review your spending. Keep a tight budget. Make sure you have an emergency fund should your job change. Secure any consumer debt and lower your spending. If you have debt, now is the time to refinance it into an existing or new mortgage. You could also consider a consolidation loan. Basically, you want any debt you have secured in a product with a fixed rate so the interest can’t fluctuate higher, and you know exactly what your expenses are month-to-month.

2. Review your income. Don’t be blind-sided to a job cut. Keep your eyes open to what is coming and ask your employer about your job stability. Look for ways to increase your income through a part-time job or side-hustle. If you have one spouse not working or just working part-time, now might be a good time for them to get back into the workforce to earn more money.

3. Stay invested. Keep to your financial plan and do not withdraw investment funds because the market goes down. Remember, what goes down in the market, always goes back up (as long as you are diversified and invested in blue-chip stock picks). Don’t panic. We most likely will experience a robust bull market after this slow down.

Christine Ibbotson is a Canadian finance writer, radio host & YouTuber. For more advice check out her YouTube channel: ASK THE MONEY LADY – Your Canadian Finance Coach.