Monday Market Minute | Oct 20, 2025

Nine-month tariff impact assessment — winners and losers crystallize

What Moved

With nine months of tariff data now available, a comprehensive assessment of the trade disruption was possible. StatsCan reported that Canadian GDP growth for the year was tracking at 1.0-1.2%, significantly below the 2.0% pre-tariff consensus. Manufacturing output fell 6.4% year-over-year. However, the services sector grew 2.1%, technology exports (exempt from goods tariffs) rose 14%, and domestic construction activity increased 3.8%. The economy was bifurcating along a clear axis: trade-exposed sectors contracted while domestically oriented sectors expanded.

Why It Matters

The bifurcation was mirrored precisely in private market returns. Funds with portfolios concentrated in domestically focused companies — Canadian healthcare, technology services, residential real estate, and infrastructure — were posting top-quartile performance. Cross-border PE and private credit portfolios with manufacturing exposure lagged. For investors constructing or rebalancing private market allocations, the data reinforced a clear lesson: geographic and sector diversification within Canada was more important than diversification across the US-Canada border when trade policy was uncertain.

Signal to Watch

Whether the approaching US midterm election cycle would moderate tariff policy as import costs affected American consumer prices, potentially creating an opening for bilateral relief.

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