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:
Canada Likely in Early Recession, TD Warns
Canada may already be in the early stages of a recession, according to economists at Toronto Dominion Bank and other analysts. TD chief economist Beata Caranci cited U.S. President Donald Trump’s tariff war as a major contributor to deteriorating business and consumer sentiment. Canadian job losses have totaled 75,000 in two months—half from manufacturing—with TD forecasting another 100,000 losses by Q3 and a peak unemployment rate of 7.2%.
While U.S. sentiment remains weak but data resilient, Canada’s pessimism is closely tied to economic performance. TD and a Bloomberg economist survey both predict economic contraction in Q2 and Q3.
Caranci criticized the federal government’s current $5.6 billion tax cut plan as insufficient stimulus, arguing it will likely be saved, not spent. She recommends alternative fiscal measures like GST holidays or home renovation tax credits to support demand and avert a deeper downturn.
Trump’s Tax Bill Could Reshape U.S.-Canada Investment Landscape
U.S. President Donald Trump’s newly passed “One, Big, Beautiful Bill” tax legislation—now headed to the Senate—could significantly disrupt cross-border investment and long-standing tax treaties, especially affecting Canadian multinationals and pension funds.
If enacted, the bill introduces retaliatory measures targeting countries deemed to have “discriminatory” tax regimes, potentially including Canada over its digital services tax. Canadian firms and pension funds—previously exempt or taxed at reduced rates—could face sharply higher U.S. tax burdens as early as 2026.
The proposed law enables annual tax hikes of up to 20 percentage points over statutory rates, potentially affecting dividend, royalty, and interest income for Canadians doing business in the U.S. Analysts warn pension funds like CPP Investments could see their U.S. tax rate jump from zero to significant levels.
Though some legal experts believe there may be room for negotiation or legal exemptions, many in corporate and pension sectors are bracing for impact. Industry groups and financial institutions are closely monitoring the bill’s Senate progression, with final decisions expected before July 4.
U.S. Speaker of the House Mike Johnson speaks to the media after the House narrowly passed the tax and spending legislation, called the “One, Big, Beautiful Bill” Act last week. The bill now goes on to the Senate. Photo by Kevin Dietsch/Getty Images
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TRENDS IN INDICES
Canadian Stock Market: TSX Gains on Commodities & Nuclear Boost
Canadian equities edged higher on Friday, with the S&P/TSX Composite Index rising 26 points to 25,880 — its 12th gain in 13 sessions. The rally was supported by stronger commodity prices and improving trade sentiment.
Energy Fuels (TSX:EFR) soared over 18% after U.S. President Donald Trump signed an executive order to boost the U.S. nuclear industry by streamlining regulations. The move triggered a broad rally in uranium stocks including NexGen, Denison Mines, and Cameco, each up 10%+. Meanwhile, profit-taking hit tech names like Tilray, Shopify, and BlackBerry, which fell more than 2%. Most actively traded stocks included Manulife, TD Bank, and Enbridge.
Monday’s TSX open may be volatile due to mixed commodity prices and light trading volumes, with U.S. markets closed for Memorial Day. Investors will focus on Canadian bank earnings this week for insights into loan growth and credit quality amid shifting interest rates.
U.S. Stock Market: U.S. Stocks Slide on Renewed Tariff Threats, Tech Sector Hit Hard
U.S. stocks closed lower on Friday, with all three major indexes posting weekly declines of over 2%, after President Donald Trump proposed a 50% tariff on European goods. The renewed trade tensions rattled markets, particularly hitting technology, communication services, and consumer discretionary sectors.
Apple fell 3% to a two-week low after Trump warned of potential tariffs on non-U.S.-made iPhones sold in the U.S. Treasury yields retreated, with the 10-year yield down 4.4 basis points to 4.509%.
The Dow fell 0.61% to 41,603.07, the S&P 500 lost 0.67% to 5,802.82, and the Nasdaq dropped 1.00% to 18,737.21. Treasury Secretary Scott Bessent said Trump sees current EU proposals as inadequate, aiming to use the June 1 tariff deadline as leverage.
Large-cap and growth stocks, including Amazon, Nvidia, and Meta, each dropped over 1%. The CBOE Volatility Index (VIX) surged 10%, reflecting growing investor unease.
Currency Markets: Dollar Slides on Trump’s Tariff Threats, Euro and Yen Strengthen
The U.S. dollar fell sharply on Friday after President Donald Trump reignited trade war fears by threatening a 50% tariff on EU goods starting June 1. The announcement triggered concerns over global economic stability and dampened investor confidence in U.S. policy.
The dollar dropped 0.8% to a one-month low, with the dollar index closing at 99.09. USD/JPY fell 1% to 142.48, its steepest weekly decline since early April. EUR/USD rose 0.8% to 1.1363, posting its biggest weekly gain in six weeks. GBP/USD climbed 0.9% to 1.3533, reaching a three-year high.
The yen gained further support after Japan’s core inflation hit a two-year high, raising prospects of another rate hike by the Bank of Japan. Meanwhile, concerns over the U.S.’s growing debt burden and Trump’s new tax cut proposal added to market unease.
The tariff-related volatility is likely to persist, as the “One, Big, Beautiful Bill” heads to the Senate for extended debate in the coming weeks.
Gold Market: Gold Surges as Tariff Fears Drive Safe-Haven Demand
Gold prices surged over 2% on Friday, marking their strongest one-day gain in six weeks, as renewed U.S. tariff threats and a weakening U.S. dollar spurred investor demand for safe-haven assets. Spot gold rose 2.1% to $3,362.70 per ounce, posting a weekly gain of 5.1%, while U.S. gold futures settled at $3,365.80.
Other precious metals also advanced: platinum climbed 1.2% to $1,094.05, touching a one-year high; silver rose 1.1% to $33.44, while palladium slipped 1.6% to $998.89. Both platinum and silver logged weekly gains.
Oil Market: Oil Prices Rise on Pre-Holiday Short Covering and Geopolitical Uncertainty
Oil prices edged higher on Friday, supported by short covering ahead of the U.S. Memorial Day long weekend and renewed concerns over U.S.-Iran nuclear talks. Brent crude rose 0.54% to $64.78 per barrel, while WTI settled at $61.53, also up 0.54%.
Markets are also watching this week’s OPEC+ meeting, where the group is expected to proceed with a planned output increase of 411,000 barrels per day in July.
Financial Market Data Copyright © 2025 AimStar myportfolio. Data as of May 27, 2025
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WHAT'S HAPPENING THIS WEEK
Monday, May 26
United States:
U.S. markets closed for Memorial Day
Canada:
Canada Post labour dispute continues to affect mail service
Tuesday, May 27
United States:
Economic Data: April durable goods orders, March S&P CoreLogic Case-Shiller home price index, May consumer confidence index
Fed: Minneapolis Fed President Neel Kashkari speaks
Canada:
Canada Post labour dispute escalates
WestJet Group CEO delivers remarks at the Calgary Chamber of Commerce
Earnings Reports:
AutoZone, Heico, Okta, Champion Homes, Box, PDD Holdings, Bank of Nova Scotia (BNS)
Wednesday, May 28
United States:
Fed: Release of minutes from the May FOMC meeting; Fed Governor Waller and New York Fed President John Williams to speak
Canada:
Bank of Montreal (BMO) and National Bank of Canada (NA) to release earnings
WestJet adjusts flight schedules in response to reduced U.S.-bound travel demand
Earnings Reports:
Nvidia, Salesforce, Synopsys, Veeva Systems, Agilent Technologies, HP, Dick’s Sporting Goods, Bank of Montreal (BMO), National Bank of Canada (NA)
Thursday, May 29
United States:
Economic Data: Initial jobless claims (week ending May 24), Q1 GDP revision, April pending home sales
Fed: San Francisco Fed President Mary Daly and Chicago Fed President Austan Goolsbee to speak
Canada:
Earnings Reports: Royal Bank of Canada (RBC), Canadian Imperial Bank of Commerce (CIBC), Laurentian Bank
BRP to release Q1 results and hold annual shareholders meeting as it advances “pure-play powersports” strategy
Earnings Reports:
Costco, Dell Technologies, Zscaler, Li Auto, Analog Devices, Workday, Autodesk, Copart, Ross Stores, Ralph Lauren, RBC, CIBC, Laurentian Bank, BRP
Friday, May 30
United States:
Economic Data: April Personal Consumption Expenditures (PCE) Price Index, advance U.S. trade balance, retail and wholesale inventory estimates, May Chicago Business Barometer, final May consumer sentiment
Fed: Atlanta Fed President Raphael Bostic and Chicago Fed President Austan Goolsbee to speak
Canada:
Statistics Canada to release final GDP figures for March and Q1 (Q1 growth estimate: 1.5%)
Earnings Reports:
Shoe Carnival (SCVL), Laurentian Bank
Published by Vikki Zhao
May 27 , 2025 17:00 AM EST. 10 min read
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