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:
U.S. and China De-Escalate Trade Tensions with Tariff Cuts
The United States and China announced a temporary tariff rollback on Monday, marking a significant step back from trade decoupling. In a joint statement following talks in Geneva, both sides agreed to reduce tariffs for 90 days. The U.S. will lower its cumulative tariff rate on most Chinese goods from 145% to 30%, while China will cut its duties on U.S. imports from 125% to 10%.
Markets responded positively: S&P 500 futures surged 3%, oil and Treasury yields climbed, and the U.S. dollar and offshore yuan strengthened. The two countries also pledged to continue negotiations, with Washington expressing hopes for expanded Chinese purchases of U.S. goods.
While Trump-era tariffs remain on certain goods, officials suggested the truce could be extended if talks progress constructively. Analysts note the move could temporarily ease trade-related pressures on global growth, though risks persist. China also suspended its recent non-tariff measures, including rare earth export controls.
This easing follows worsening trade data and signals from both sides seeking to avoid economic fallout. However, economists caution that past attempts at deals, like the 2020 Phase One agreement, failed to produce lasting results.
"Navigating Market Strategy Amid the 2025 Trade War" — a comprehensive outlook by Scott Cheng, Portfolio Manager at AimStar.
Canadian Travel to U.S. Falls Sharply Amid Tariff Backlash
Canadian travel to the United States fell sharply in April, with land crossings dropping 35.2% year-over-year and air travel down 19.9%, according to Statistics Canada. The decline reflects growing discontent over U.S. President Trump’s tariffs and annexation rhetoric, prompting many Canadians to redirect their vacation plans to Europe, Asia, and Latin America.
Industry experts report a major slowdown in new bookings to the U.S., with agencies like Flight Central seeing a 53% drop. Airlines have responded, with Air Canada and others cutting U.S.-bound flights while increasing capacity to Latin America. The shift suggests a sustained recalibration in Canadian travel preferences amid geopolitical uncertainty.
Canadian Job Market Weakens Amid Trade Tensions
Canada’s unemployment rate rose in April
Canada’s unemployment rate rose to 6.9% in April, the highest since January 2017 outside of the pandemic period. This marks the third consecutive month of job losses or stagnation, with an average net decline of 8,000 jobs per month.
Trade tensions were a key factor, with manufacturing shedding 31,000 jobs and wholesale/retail trade down by 27,000. Economists warn the labour market was already fragile and could deteriorate further if trade-related pressures persist.
Alberta Freezes Industrial Carbon Price Amid Trade Tensions
The Alberta government announced an indefinite freeze on its industrial carbon price at $95 per tonne, scrapping its previous plan to gradually raise the price to $170 by 2030. Premier Danielle Smith said the move aims to preserve competitiveness and protect jobs as Canada faces rising trade tensions with the U.S.
Environment Minister Rebecca Schulz emphasized that Alberta remains committed to emissions reduction but warned that a carbon price above $100 would hurt the province’s global competitiveness. The decision is framed as balancing environmental goals with economic stability and energy sector growth.
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Pre-Market Overview for This Week
Canadian Stock Market
Canadian equities rose for a fourth straight session Friday, with the S&P/TSX Composite Index up 0.4% to 25,358 — a two-month high — supported by strong commodity prices and corporate earnings. The index gained 1.3% for the week, marking its fifth consecutive weekly gain.
Air Canada (TSX:AC) surged 14.6% after announcing a $500 million share buyback, despite posting a Q1 operating loss of $108 million. Its strong cash flow and narrower-than-expected adjusted net loss lifted investor sentiment.
Lundin Gold, NFI Group, and Algonquin Power also posted strong gains, while Pembina Pipeline and Trisura were among the laggards.
U.S. Stock Market
U.S. equities ended mixed on Friday, with the S&P 500 barely moving and investors cautious ahead of critical U.S.-China tariff discussions in Switzerland. The S&P 500 fell 0.07% to 5,659.91, while the Dow dropped 0.29% and the Nasdaq ended flat. For the week, all three indices posted modest losses.
Despite 76% of the 450 S&P 500 firms that have reported earnings beating expectations, many lowered or withdrew forward guidance due to growing trade uncertainty. Sector-wise, energy gained 1.1% amid optimism over trade talks, while healthcare lagged, down 1.1%.
India is reportedly proposing to cut its tariff gap with the U.S. from 13% to below 4% in hopes of avoiding new U.S. trade penalties.
Fed officials echoed Chair Jerome Powell’s call for policy patience, citing heightened risks from Trump’s trade strategy.
Currency Markets
The U.S. dollar showed mixed performance on Friday but remained on track for weekly gains against key peers including the Swiss franc and Japanese yen, driven by optimism surrounding global trade talks—particularly the new U.S.-U.K. trade agreement. USD/CHF was flat at 0.8315 but headed for a fourth straight weekly gain. USD/JPY fell 0.39% to 145.355 but still marked a third consecutive weekly rise. EUR/USD climbed 0.17% to 1.1250, trimming its third weekly loss in a row. GBP/USD rebounded 0.5% to 1.3306, poised for a weekly gain despite initial weakness following the trade news. Diverging central bank policies added to currency market dynamics: the Fed held rates steady, the Bank of England cut rates, while Sweden and Norway left policy unchanged.
Gold Market:
Gold prices rose over 1% on Friday to $3340.29/oz as the U.S. dollar weakened and markets absorbed Trump’s tariff remarks. Despite a dip in early Monday trading near $3278/oz following reported U.S.-China trade progress, gold still posted a weekly gain of 3.1% and is up 27% year-to-date. Ongoing geopolitical risks—such as renewed military tensions between India and Pakistan—and tariff uncertainty remain key drivers. However, analysts at High Ridge Futures warn of a potential consolidation phase. Meanwhile, Indian gold demand remains weak, with discounts offered amid high local prices.
Oil Market:
Oil prices rose nearly 2% Friday, with Brent closing at $63.91 and WTI at $61.02 per barrel. Both benchmarks gained over 4% for the week, supported by optimism over U.S.-UK trade progress. Analysts note sentiment is rebounding despite bearish fundamentals. However, supply risks persist, with U.S. sanctions on Iranian refiners and the upcoming Iran nuclear talks in Oman. OPEC+’s plan to increase output may limit future price gains.
Financial Market Data Copyright © 2025 AimStar myportfolio.
Data as of May 15, 2025, 15:35 PM
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Monday, May 12, 2025
United States: Release of April federal budget; Federal Reserve Governor Adriana Kugler to deliver remarks
Earnings: Simon Property Group (SPG), NRG Energy (NRG), Fox Corp. (FOX), Monday.com (MNDY)
Tuesday, May 13, 2025
United States: Release of April NFIB Small Business Optimism Index and April Consumer Price Index (CPI)
Canada: Hudson’s Bay to seek court approval to extend creditor protection to July 31 and request to repay up to $165 million in loans; CAE Inc. to release Q4 and full-year fiscal 2025 results (after market close)
Earnings: JD.com, On Holding (ONON), Tencent Music Entertainment (TME), Oklo (OKLO)
Wednesday, May 14, 2025
United States: Speeches by Fed Vice Chair Philip Jefferson, Governor Christopher Waller, and San Francisco Fed President Mary Daly
Canada: CAE to host earnings conference call; B7 Business Summit opens in Ottawa
Earnings: Sony Group (SONY), Cisco Systems (CSCO), CoreWeave (CRWV), Dynatrace (DT), Alcon (ALC)
Thursday, May 15, 2025
United States: Release of initial jobless claims (week ending May 10), April retail sales, Producer Price Index (PPI), industrial production, capacity utilization, March business inventories, and May homebuilder confidence; Speeches by Fed Chair Jerome Powell and Vice Chair Michael Barr
Canada: Canadian Real Estate Association to release April national home sales data; South Bow Corp. to report Q1 earnings (after market close)
Earnings: Walmart, Alibaba, Deere & Co., Applied Materials, Mizuho Financial Group (MFG), Take-Two Interactive, Cava Group (CAVA)
Friday, May 16, 2025
United States: Release of April import/export price index, housing starts and building permits, and preliminary May University of Michigan Consumer Sentiment Index; Speech by Richmond Fed President Tom Barkin
Canada: South Bow Corp. to host earnings call; U.S. Ambassador to Canada Pete Hoekstra to speak at the B7 Summit in Ottawa
Published by Vikki Zhao
May 15 , 2025 17:00 AM EST. 10 min read
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