Global Economy and Markets Under the Shadow of Tariffs: How to Build a Resilient Investment Strategy
Amid renewed tariff threats from the Trump administration, global markets have experienced renewed turbulence. Tariff policies can have far-reaching impacts on inflation, consumer confidence, corporate investment decisions, and even international relations. In this heightened climate of uncertainty, how should investors interpret the macroeconomic signals behind these developments? What key variables will shape market movements ahead? And how can one strike a balance between stability and growth during volatile times?
In AimStar’s latest strategy report, Scott Cheng, Senior Vice President and Portfolio Manager, notes that the Trump administration’s tariff actions are injecting significant uncertainty into the global economic outlook, inflation trajectory, and market sentiment.
Key Highlights from the Report:
Short-Term Strategy: Adopt a defensive asset allocation by increasing exposure to fixed income and defensive equity sectors.
Medium-Term Outlook: Stay responsive to macroeconomic indicators and corporate earnings data, with flexibility to adjust portfolio allocations accordingly.
Long-Term Core View: Maintain diversification and a long-term investment approach, seizing opportunities during structural pullbacks.
The report also points out that current market valuations have corrected to relatively reasonable levels. Should trade tensions ease or the Federal Reserve signal a shift toward monetary accommodation, a technical rebound may follow.
👉 For the full analysis, read the article:
Return of Protectionism Signals Potential End of the Free Trade Era
On April 2, U.S. President Donald Trump announced a 10% baseline tariff on most imported goods, alongside high retaliatory tariffs on countries that restrict U.S. exports. Although some of the measures were postponed for 90 days in response to market volatility, the move is widely seen as a turning point for the global free trade system.
European Central Bank Executive Board Member Isabel Schnabel remarked that this development may mark “the end of global free trade.” Eswar Prasad, professor at Cornell University, echoed this sentiment, warning that the world is entering a new economic order dominated by protectionism, rising geopolitical tensions, and transactional bargaining.
Economists at National Bank of Canada caution that the resurgence of protectionism could amplify existing vulnerabilities in the global economy. Amid post-pandemic fiscal strain, further sovereign debt issuance to support growth may drive up interest rates and suppress recovery momentum. At the same time, a resurgence in inflation would limit central banks’ policy flexibility, weakening their ability to respond effectively to shocks.
The National Bank has revised down its global GDP growth forecasts to 2.8% for 2025 and 2.7% for 2026.
In this highly uncertain environment, AimStar Portfolio Manager Scott Cheng advises investors to adopt a cautious stance. He recommends increasing exposure to defensive assets, closely monitoring inflation, employment data, and policy developments, and maintaining flexibility in portfolio strategies to capture structural opportunities while preserving capital growth.
"Navigating Market Strategy Amid the 2025 Trade War" — a comprehensive outlook by Scott Cheng, Portfolio Manager at AimStar.
Trump’s Tariff War May Trigger Fiscal Crisis in Canada — Regardless of Election Outcome
As Canada’s federal election approaches, leading candidates Mark Carney and Pierre Poilievre continue to campaign on traditional policy platforms such as housing, taxation, and investment. However, the country now faces a looming fiscal and policy crisis sparked by a new round of tariffs imposed by U.S. President Donald Trump.
On April 2, the U.S. announced double-digit tariffs on imports from over 50 trading partners. Although the most severe measures are delayed until July, the economic repercussions are already being felt. Economists warn that Canada will not only bear the direct financial cost of these tariffs but will also be forced to restructure trade relations, rebuild supply chains, and ramp up defense spending to meet NATO commitments.
Multiple studies suggest Canada’s federal deficit could soon rise above CAD 60 billion. Should economic conditions deteriorate further, additional stimulus and fiscal support programs could push the figure past CAD 100 billion. Rebekah Young, Vice President at Scotiabank, noted: “No matter who forms the next government, revisions to the current fiscal plan will be unavoidable.”
Despite pledges from all major parties to rein in spending, campaign promises related to housing finance, critical mineral transportation corridors, and defense funding suggest that expenditures could far exceed current projections. Meanwhile, Canada’s five-year credit default swap (CDS) spread rose to 30 basis points in mid-April, signaling growing market concern over the country’s sovereign credit risk.
This report includes insights from the Financial Post article “Trump tariff war could trigger flood of red ink in Canada no matter who wins the federal election” by Barbara Shecter, published April 17, 2025.
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Pre-Market Overview for This Week
Canadian Stock Market
Canadian equities rose for a fifth consecutive session on Thursday, supported by strong gains in commodity prices and growing optimism over U.S. trade negotiations with key global partners. The S&P/TSX Composite Index climbed 86 points, or 0.4%, to close at 24,193 — its highest closing level since April 3.
Nearly all major sectors ended the day in positive territory, led by healthcare, energy, and utilities. For the week, the benchmark index advanced 2.6%, marking its strongest weekly gain in 31 weeks.
Looking ahead, while no major Canadian economic data releases are expected in the near term, market volatility may persist as investors brace for the upcoming corporate earnings season. With ongoing trade uncertainty and interest rate pressures, earnings reports will be closely scrutinized for insights into how companies are navigating the current macroeconomic challenges.
U.S. Stock Market
Due to the Good Friday holiday, most global markets were closed last Friday, leading to thin trading volumes. U.S. equities ended Thursday’s session mixed as investors assessed the progress of U.S.-Japan trade negotiations and remained cautious about the Federal Reserve’s rate trajectory.
Although former President Donald Trump stated on Wednesday that the bilateral dialogue between the U.S. and Japan had made “significant progress” following a steep market selloff, investor sentiment remained subdued. The S&P 500 gave up its gains in late trading, while the Nasdaq turned negative, reflecting a wait-and-see approach heading into the long weekend.
For the week, all three major U.S. indexes posted declines. The S&P 500 fell 1.5%, the Nasdaq lost 2.6%, and the Dow Jones Industrial Average dropped 2.7%. Since Trump’s announcement on April 2 of a sweeping tariff hike on global imports, the S&P 500 has declined approximately 7%.
Expectations for near-term interest rate cuts by the Federal Reserve have cooled. According to the CME FedWatch Tool, the probability of a rate cut in May has dropped to around 6%. Meanwhile, a Reuters poll indicates that the likelihood of a U.S. recession within the next year is rising.
Currency Markets
The U.S. dollar fell below 99 on Monday, hitting its lowest level since April 2022, as concerns over an escalating trade war and the Federal Reserve’s independence weighed on investor sentiment. Despite a mild rebound late last week, the greenback’s safe-haven appeal continues to erode.
Tensions intensified after President Trump threatened to dismiss Fed Chair Jerome Powell, prompting widespread debate over the central bank’s autonomy. Powell reaffirmed that he would serve his full term, regardless of political pressure.
Trade negotiations between the U.S., Europe, and Japan also drew market attention. While speculation arose that the U.S. would target the yen, Japanese officials denied exchange rates were part of discussions. Meanwhile, the Bank of Japan signaled potential rate hikes if inflation meets targets. The EU is seeking a fair tariff deal with Washington.
In FX markets, the euro rose to 1.1389 after the ECB delivered its seventh 25-basis-point rate cut, bringing the key rate to 2.25%. The British pound hit a six-month high of 1.3298, supported by stable growth and moderating inflation in the UK.
Looking ahead, this week’s PMI and consumer sentiment data may offer early insights into trade war impacts. Investors will also monitor the G20 finance ministers’ meetings, the IMF/World Bank Spring Meetings, and the upcoming Fed Beige Book for further guidance on global economic policy direction.
Gold & Oil Markets
Gold Market:
Spot gold traded near US$3,347/oz on Monday as safe-haven demand persisted amid global trade uncertainty. Market sentiment was further boosted after U.S. President Donald Trump posted, “Whoever owns gold makes the rules.” Despite a 0.8% dip last Thursday due to pre-holiday profit-taking, gold remained above US$3,300, posting a weekly gain of over 2%.
Analysts noted that while technical pullbacks may occur, geopolitical and economic uncertainties in 2025 could continue to attract dip-buying interest.
Other precious metals were mixed: silver fell 0.9%, platinum was flat, and palladium declined 1.5%.
Oil Market:
Crude oil prices opened lower on Monday, with WTI briefly dipping below US$63.20, after U.S.-Iran nuclear talks over the weekend reduced supply concerns. However, both WTI and Brent crude posted weekly gains of around 5%, marking their first weekly rise in three weeks.
The recovery was supported by positive signals from U.S.-EU trade discussions and additional production cut pledges from Iraq and other OPEC members, even as global institutions downgraded oil demand forecasts amid ongoing trade tensions.
更多深入分析请阅读文章：
AimStar投资组合经理Scott Cheng 对2025年贸易战背景下市场策略的完整解读。
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April 21 (Monday)
U.S.: March Leading Economic Index release.
Global: Spring meetings of the International Monetary Fund (IMF) and World Bank begin.
Earnings: W.R. Berkley (WRB)
April 22 (Tuesday)
Earnings: Tesla, SAP, GE Aerospace, Verizon (VZ), Capital One (COF), Lockheed Martin (LMT), Intuitive Surgical (ISRG)
April 23 (Wednesday)
U.S.: April S&P Global Manufacturing and Services PMI Flash, March New Home Sales, Federal Reserve Beige Book release.
Earnings: Philip Morris International (PM), IBM, AT&T, Thermo Fisher Scientific (TMO), Chipotle (CMG), GE Vernova (GEV), ServiceNow (NOW), Boeing,
Canada: Rogers Communications (TSX:RCI.B), First Quantum Minerals (TSX:FM), TFI International (TSX:TFII)
April 24 (Thursday)
U.S.: Weekly Initial Jobless Claims (April 19), March Durable Goods Orders, March Existing Home Sales
Earnings: Alphabet, Procter & Gamble (P&G), T-Mobile, PepsiCo, American Airlines (AAL), Merck (MRK), Comcast, Bristol Myers Squibb (BMY), Intel,
Canada: Teck Resources (TSX:TECK.B)
April 25 (Friday)
U.S.: April Final University of Michigan Consumer Sentiment Index
Canada: February Retail Sales from Statistics Canada
Earnings: AbbVie, HCA Healthcare (HCA), Aon, Colgate-Palmolive, Charter Communications (CHTR)
Published by Vikki Zhao
April 21, 2025 11:00 AM EST. 10 min read
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