Monday Market Minute | Jan 20, 2025

Trump takes office — Canadian markets brace for tariff action

What Moved

Donald Trump's inauguration on January 20 immediately reshaped the Canadian investment landscape. Within hours of taking office, the administration signalled 25% tariffs on all Canadian imports, citing trade imbalances and border security. The Canadian dollar dropped sharply, the TSX sold off, and PE sponsors with cross-border portfolio companies began stress-testing exposure. The uncertainty was instant and pervasive.

Why It Matters

Private markets investors faced a new risk calculus. Canadian PE firms with US revenue exposure needed to model tariff pass-through scenarios. Private credit portfolios heavy in manufacturing and export-oriented borrowers faced potential credit deterioration. Conversely, domestically focused strategies — Canadian real estate, infrastructure, and services — suddenly looked more defensible. The tariff threat accelerated a rotation toward inward-facing private market allocations.

Signal to Watch

The speed of executive action mattered. Markets were watching whether tariffs would arrive via executive order in the first week or follow a longer negotiation timeline that allowed Canadian industries to adapt.

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