Monday Market Minute | Jan 20, 2025
Trump's inauguration brings immediate tariff threats against Canada. Private markets assess cross-border exposure and hedge strategies.
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.