Canada-U.S. tariffs: Market and sector implications

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Hi everyone. I wanted to provide a quick update regarding the

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collapse of the trade talks between Canada and the United States.

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Let me walk you through what happened, why it matters and how it fits into the

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way we've been positioning portfolios all year.

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So what happened? For over a year, Canada and U.S.

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Have been negotiating a renewal of CUSMA, our free trade agreement.

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Back on July 1st, the U. S. Actually declined to extend the deal in its current

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form. Which kicked off a tougher round of talks.

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Things looked like they were making real progress in recent weeks, but

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Friday night, it all fell apart.

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The US proposed new terms at the last minute that Prime Minister Carney

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called unfair and uneconomic.

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Canada's negotiators came back to Ottawa, and just after midnight, the US

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followed through on a threat it had been holding over Canada, a 50%

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tariff on about $20 billion worth of Canadian goods.

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Hitting things like dairy, alcohol and building materials.

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Canada's response was quick.

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Canada will match those tariffs dollar for dollar starting September 8th,

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targeting sectors like steel, dairy and electronics.

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And news reports suggest that we shouldn't expect talks to resume anytime

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soon. So we should be prepared for this to run for a while.

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Why it matters. But here's the thing.

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This shouldn't come as a surprise to anyone who's been following our research.

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We have been telling this story for over a year now.

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Back in the summer of last year, we made the call that the drift away

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from the US was not a temporary blip.

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It was a durable, structural shift.

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And by the fall of last, we were already flagging concerns about

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the increased political influence of US institutions and

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building a more constructive case for Canada, even while the domestic economy

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still looked weak on paper.

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So, what does it mean for positioning?

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How does this fit into what we've been doing in the funds we manage for

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Canadian investors?

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A few ways. First, diversification away from the U.S.

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Dollar and U. S. Assets. Something we have been doing since the start of this

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year looks prescient today.

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We're not scrambling to react to this weekend's news.

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We've been building in resilience in the event of this kind of

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scenario. Second, this is a textbook example of

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the kind of geopolitical shock.

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We've been positioning for with commodities and gold.

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When trade relationships get disrupted, hard assets tend to hold their

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value better than promises on paper.

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And that's exactly the kind of hedge we've leaned into.

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And third, and this might sound counterintuitive, our view on Canada hasn't

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changed. The team has argued for months that Canada may be reaching

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an inflexion point.

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Cyclically well-positioned, benefiting from strong commodity demand, and

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increasingly attractive. To global capital precisely because

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it's diversifying away from the US dependence.

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A trade dispute is a real near-term headwind, no question, but it doesn't

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undercut the structural case.

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If anything, it reinforces why Canada is actively working to

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reduce that dependence in the first place.

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Bottom line, this is a genuine escalation and we're watching it closely, but

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its It's not a reason to panic and it's not a reason abandon the positioning

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we've had in place.

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If anything, the last few days are a reminder of why

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we have positioned these portfolios to be resilient to exactly

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this kind of shock.

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Thanks for watching.