March 2025 Market Recap
March was a poor month for stocks as the threat of tariffs continued to worry investors. Regardless of what the tariffs turn out to be, just the threat is having a negative effect on businesses. The uncertainty surrounding them is causing businesses to delay investment decisions, consumers are holding off on big purchases, and governments are scrambling to react.
It is clear that the American administration will not be playing by any of the old rules. Allies such as NATO are no longer necessarily allies and the global economic system, based on increasing levels of free trade, are giving way to protectionism. It is not absolutely certain how this new reality will work, but investors don’t like the unknown, and this is all very new and unknowable.
Adding to the uncertainty is the rapid pace in which the U.S. is dismantling their own government. Mass firings and shutting down entire agencies have caused worry that Americans will no longer be able to count on government programs that they had previously relied upon or taken for granted.
In Canada, our election moves along at full tilt, but until we have a new government, not much substantive can be done on the trade front. The two main ministers on the file, Dominic LeBlanc and Melanie Joly, continue to work the phones, but it seems likely that it is to no avail. Canada, in all likelihood, will have to get used to tariffs.
Again, it is not clear how these tariffs will unfold, or how long they will last, but what we do know from past experience is that they will raise the cost, to the consumer, of buying the things they need and want. The President believes that this will encourage manufacturers to set up more manufacturing plants in the U.S., and there is some evidence to suggest this is already happening.
However, I think it is reasonable to believe that, once the true cost of tariffs becomes apparent to the U.S. government, there will be plenty of pressure to take a step back. Although it is true that the U.S. would like more goods to be made in the U.S., it is also true that change cannot happen overnight. There will likely be too much pain to bear between then and now, and we may see at least a reduction in tariff rates.
For Canada, it is simply clear that we must diversify our economy and find new customers and new ways of doing business. As Mark Carney noted, the old relationships are over.
Disclaimer:
Information in this article is from sources believed to be reliable, however, we cannot represent that it is accurate or complete. It is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell securities. The views are those of the author, Michael Stott, and not necessarily those of Raymond James Ltd. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decision. Raymond James Ltd. is a Member Canadian Investor Protection Fund.
