Monday Market Minute | Jun 23, 2025

Tariff negotiations enter a new phase — sector-by-sector carve-outs emerge

What Moved

After months of blanket tariff rhetoric, US-Canada trade negotiations evolved into a more granular phase. Reports indicated that sector-specific carve-outs were being negotiated — with energy, critical minerals, and automotive parts receiving the most attention. The blanket 25% tariff remained the default, but exemptions for select industries appeared achievable. Canadian business lobby groups, coordinated through the Canadian Chamber of Commerce, were actively shaping the negotiation agenda with detailed economic impact analyses.

Why It Matters

For private markets, the shift from blanket to sector-specific tariffs created a more nuanced risk landscape. PE portfolio companies in exempt sectors saw immediate relief in valuation models. Private credit underwriters began differentiating more aggressively between borrowers likely to receive carve-outs and those that would face the full tariff burden. Infrastructure investors with energy exposure stood to benefit if energy trade was exempted. The complexity favoured sophisticated allocators who could parse the policy detail — exactly the competitive advantage that private markets expertise provides.

Signal to Watch

Whether the carve-out negotiations concluded before the US Congress's summer recess or dragged into the fall, prolonging the uncertainty that had suppressed cross-border deal activity for six months.

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