In a scene reminiscent of the 2018 trade wars, tariff threats are once again rattling boardrooms from Wall Street to Bay Street. After a period of relative calm following the USMCA trade agreement, a resurgence of U.S.-Canada trade tensions is unfolding, bringing back uncertainty that many investors hoped was history. From steel mills in Hamilton to canola fields in Saskatchewan, businesses are bracing for fallout. Investors, too, are on edge – watching market screens flicker with every new headline. This narrative-driven analysis unpacks the latest shifts in trade policy, examines the impact on key industries, and explores how markets and investors are reacting. Crucially, we’ll also highlight potential investment opportunities (from low-risk havens to high-risk bets) for those navigating these turbulent cross-border waters.

Policy Update & Timeline (February 2025)

Pause on Broad Tariffs:

Early February negotiations temporarily cooled trade tensions. On Feb. 3, 2025, the U.S. agreed to pause sweeping tariffs on Canadian imports for 30 days (until March 4, 2025) (US Tariff and Trade Update: Temporary Pause on Canada and Mexico, Tariffs on China, China Retaliation, and What’s Next | HUB | K&L Gates). These broad tariffs – 25% on most Canadian goods (with 10% on certain energy and minerals) – had been slated to kick in Feb. 4 under an executive order invoking the International Emergency Economic Powers Act (IEEPA) (Tariffs Paused in Mexico and Canada, but not China) (Tariffs Paused in Mexico and Canada, but not China). The pause, secured in exchange for cooperation on border security and drug issues, also put Canada’s promised counter-tariffs on hold (US Tariff and Trade Update: Temporary Pause on Canada and Mexico, Tariffs on China, China Retaliation, and What’s Next | HUB | K&L Gates). This gave both sides a brief window to negotiate before the new deadline.

New 25% Metals Tariffs Announced:

That truce proved short-lived. On Feb. 10-11, President Trump signed proclamations imposing 25% tariffs on all steel and aluminum imports worldwide – including Canada – effective March 12, 2025 (US 25% steel tariffs would stack on other levies on Canada, White House official says | Reuters) (US 25% steel tariffs would stack on other levies on Canada, White House official says | Reuters). These orders removed all country exemptions and raised the U.S. tariff on aluminum from 10% to 25%, matching the 25% steel rate (Trump raises tariffs on aluminum, steel imports in latest trade war salvo | Reuters) (Trump raises tariffs on aluminum, steel imports in latest trade war salvo | Reuters). A White House official confirmed the across-the-board metals duties would take effect March 12, 2025 (US 25% steel tariffs would stack on other levies on Canada, White House official says | Reuters). In effect, the earlier targeted pause for Canada will expire March 4, and a week later the global steel/aluminum tariffs hit on March 12 – a one-two punch.

What’s Happening to the Canadian Dollar?

The Canadian dollar, affectionately known as the loonie, has tumbled to levels not seen in decades. In early 2025, it fell below US$0.70, hitting its weakest value against the U.S. dollar since 2003 (Loonie drops to lowest level in two decades – BNN Bloomberg) (US dollar edges lower as China tariffs kick in | Reuters). For context, the all-time modern low for the loonie was about US$0.62 in January 2002 (History of the Canadian Dollar). Recent declines have brought it uncomfortably close to those multi-decade lows. Just one year ago, the loonie was worth about US$0.75, so it has lost roughly 8% of its value in a year ( Will the Weak Canadian Dollar Drive Inflation Higher? | Morningstar ) – a significant move for a major currency.

This isn’t the first slump Canadians have lived through. The loonie was similarly weak in early 2016 (briefly dipping under US$0.70) and during the 2008-09 financial crisis (We’ve reached a milestone. This is the lowest the Canadian dollar …). However, the current downturn is notable for its persistence and the mix of economic forces behind it. Let’s explore what’s driving the loonie’s slide and how it compares to past bouts of weakness.

Economic Factors Driving the Loonie’s Decline

A combination of domestic and international factors has created a perfect storm for the Canadian dollar’s depreciation. Key drivers include:

Types Of Investments

Choosing the right type of investment can be a tricky venture. Once you have made the decision to invest your money, research and time can be a crucial part of the process to ensure success. It is important to understand the risks and benefits when weighing your options. Two critical questions to ask yourself is, how much money to invest and where to invest it. Let us look at several investment options.

American Depository Receipt (ADR) Investments

American Depository Receipt or ADR are investments that involve buying stock in companies in other countries. Basically, U.S. banks or investment companies put a certain amount of stock in its depositories. They then set the ratio of U.S. ADRs per the foreign country’s share. If the shares are worth less in the home country, then each ADR will be worth more than one share. The investor will then buy shares of that stock in U.S. dollars. The foreign companies like to use the ADR system because of the exposure they get in the U.S. Since they are traded in U.S. currency, they generally do not have duty fees. However, the depository may charge a small fee for their service. This process, in turn, allows individuals to invest in foreign stock. These investments are a good way for individuals to gain capital from emerging countries.

Annuity Investing

Annuities are simply fixed payments over a period of time. The investor makes periodic payments to a financial institution or an insurance company. The amount the investor receives is dependent upon how much is paid each period and for how long. This investment is low-risk and appeals to those wanting income. Fixed annuities have a fixed payment and are similar to government bonds and corporate bonds. They are not regulated by the Securities and Exchange Commission. Variable Annuities are regulated by SEC and allow investments in money marketing. Annuities can be deposits into a savings account, monthly insurance payments or mortgage payments. This is a good type of investment for capital appreciation that is fairly low-risk.

Strategies For Your Investments

Making sensible investments starts with understanding certain aspects of the investment world. Ongoing research and planning goes a long way when attempting to protect your money and save for the future. Finding the best type of investment for your individual needs can be overwhelming, especially if you are just starting out. Since investing money is such a broad area, it is essential to have a plan, or investment strategy.

Strategy #1 – Savings Bonds Investments

Considered one of the safest types of investments, savings bonds are debt securities that are issued by the United States Department of Treasury. There are two types of bonds. EE bonds are paper-type bonds that most people are familiar with, and I bonds. I bonds are somewhat different than the EE bonds. Saving bonds are a long-term investment that accrue fixed or market value interest every six months. Starting out at $25, these investments are affordable and safe. They are completely secure and will be replaced if they are lost or stolen.

Strategy #2 – 401K / RRSP Investments

A 401k plan (called an RRSP or Registered Retirement Savings Plan in Canada) is an investment in which companies allow their employees to make contributions of a specified maximum amount each year. The employers usually also make contributions by matching a certain percentage with the employee. These plans were taken on by employers as an alternative retirement plan. The employee chooses where their savings will be invested, which usually consists of a combination of stocks, bonds and money market investments. One advantage to 401k plans / RRSPs is that they are tax-deferred investments, however, they are greatly penalized if taken out prematurely.