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  5. MISC: In general, how should Canadian investors consider adjusting portfolios in light of the tariff threat? [Miscellaneous]
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Q: In general, how should Canadian investors consider adjusting portfolios in light of the tariff threat? Should they be reducing exposure to Canadian equities on a relative basis? What fixed income /cash alternatives should be considered?
Asked by Ian on January 13, 2025
5i Research Answer:

Keep in mind the tariff fear is not 'new' news. Valuations in many sectors have adjusted. We need now to wait to see if reality matches the fear. In his prior term Trump often 'walked back' tariff rhetoric. We might be more cautious on the industrial sector, as it may be the most vulnerable. Autos have been hit hard. We continue to think, as before, that the US market looks better than Canada for the next 18 months or so. The US economy, simply, is much stronger. Fixed income is fine as an asset class, but we would also look to add some US exposure there as well, because rates are not likely to drop as fast as in Canada, and this could see the US dollar continue to be relatively stronger. Still, depsite all this, we would not make BETS that the tariffs are going to wreak havoc. They may, but keep in mind markets did very well under Trump's first term. Investors and companies are good at anticipating the future.