Trump's Tariffs
and Your XEQT.

What actually happened

On February 1, 2025, Donald Trump signed executive orders imposing 25% tariffs on all Canadian goods, with a 10% rate on Canadian energy. Canada retaliated with tariffs on $30 billion of US goods, which escalated to $155 billion over three weeks. It was the biggest trade shock to hit Canada-US relations since NAFTA was negotiated.

If you were holding XEQT during this period, your portfolio dropped. The S&P/TSX Composite fell 1.5% on the first day tariffs were confirmed. The S&P 500 lost 1.8%. Global equity markets went into a sustained slide through March and into April 2025, when the S&P 500 briefly approached bear market territory, down almost 19% from its February peak. XEQT, which holds 45% in US equities and 25% in Canada, felt both hits at once.

At the worst point, XEQT hit a 52-week low of $27.54. That is a significant decline from the 52-week high of $42.36. Many Canadian investors who had never seen a real correction watched their portfolios drop and started asking the wrong questions.

What XEQT actually owns

Before you can assess how tariffs affect XEQT, you need to understand what XEQT actually holds. It is not a Canadian ETF. It is not a US ETF. It is a globally diversified fund with exposure across four major regions.

The price chart tells the whole story

Forget the headlines. Look at what actually happened to XEQT's price over the trade war period. The 52-week data from Yahoo Finance tells a clear story.

The 2025 bar is the one that matters here. Despite a full year of tariff chaos, escalations, retaliations, threats of annexation, and a brief brush with bear market territory, XEQT finished 2025 up 20.58%. That is not a typo. The full trade war year was the third-best year in XEQT's history on an annual basis.

The 52-week data is even more instructive. The low was $27.54. The high was $42.36. An investor who panicked and sold at or near the low locked in a loss of roughly 35% from the high. An investor who held through the panic and bought more during the crash is now sitting on gains at both the original cost and the added units.

Why it always recovers

The recovery from the 2025 tariff crash was not a lucky accident. It followed a pattern that has repeated after every market shock in XEQT's history. Understanding the mechanism makes it much easier to hold through the next one.

Markets priced in worst-case scenarios during the crash. When those worst-case scenarios did not fully materialise, the repricing was violent and fast. The April 9 rally after the 90-day reprieve announcement was one of the largest single-day gains in recent memory. Investors who were in cash that day missed it entirely.

There is a structural reason why XEQT recovers from politically driven crashes faster than Canada-only or sector-specific funds. When US-Canada trade relations deteriorate, the international 25% allocation tends to benefit from relative currency and trade flows. When US growth concerns rise, the global diversification softens the blow. The fund is engineered to survive exactly this type of shock.

The 2018 to 2019 steel and aluminium tariff episode is instructive. During that period the TSX gained roughly 5% and the S&P 500 gained 7% across the entire tariff timeline. The market had two years of scary headlines and finished higher both times. The 2025 episode followed the same arc, compressed into a single calendar year.

What the panic sellers did

Here is the actual arithmetic of panic selling. An investor with $10,000 in XEQT at the 52-week high of $42.36 held roughly 236 units. At the 52-week low of $27.54, that position was worth roughly $6,499. If they sold at the low, they locked in a loss of approximately $3,501 per $10,000 invested.

By the time XEQT returned to the $42 range after the recovery, an investor who had held through the crash had recovered all of that loss plus earned the subsequent gains. The investor who sold at $27.54 needed to decide when to buy back in, almost certainly watched the rally happen without them, and either missed the recovery or bought back at higher prices than they sold at.

This pattern repeats with remarkable consistency. The investors who suffer permanent capital loss in market crashes are not those who held through them. They are those who sold during them. XEQT does not create permanent capital loss. Panic selling does.

Current tariff status (March 2026)

The situation as of March 2026 is substantially better than the worst-case fears of early 2025, but it is not fully resolved. Here is where things actually stand.

Canada's retaliatory tariffs on most US consumer goods were lifted in September 2025 as part of a strategic pivot toward trade normalisation. Steel, aluminium, and automobile tariffs remain on both sides. The biggest outstanding risk is the CUSMA review expected around mid-2026. If the exemptions that protect 85% of trade are weakened or eliminated, effective tariff rates on Canadian exports could rise significantly. TD Economics called this outcome a "total wildcard" for the Canadian economic forecast.

For XEQT investors, the CUSMA review is worth monitoring but not worth acting on in advance. If CUSMA deteriorates, it will be reflected in XEQT's Canadian holdings, primarily financials and energy. It will not touch the 45% US allocation or the 25% international allocation. The impact would be real but contained to a fraction of the portfolio.

What to do now

The honest answer is: probably nothing different from what you were doing before the trade war started. But here is the complete checklist.

• Keep contributing on schedule Tariff volatility creates lower prices. Lower prices mean your regular contribution buys more units. The investors who contributed during the April 2025 dip at $27-30 per unit are now sitting on the best units in their entire portfolio history.
• Do not trade on tariff headlines Every tariff headline since November 2024 has been followed by a partial reversal, an exemption, or a negotiated pause. Markets are very good at pricing political chaos. You are not faster than the market. Acting on individual tariff announcements is the clearest path to underperformance.
• Check your time horizon If your money is needed within five years, it should not be 100% in XEQT regardless of tariffs. A down payment for a house, a child starting university in three years, money for a car next year: these should be in GICs or a conservative ETF. Tariffs did not change this rule. It was always true.
• Monitor the CUSMA review (passively) Set a news alert for "CUSMA review 2026" and check it once a month. If the review goes badly and exemptions are stripped, that is a genuine structural change worth understanding. It is not worth acting on before it happens.
• Consider whether your Canadian home is already your Canada bet Most Canadians own or aspire to own Canadian real estate. Your human capital is paid in Canadian dollars. Your pension (if any) is in Canadian institutions. You already have enormous Canadian exposure outside your investment portfolio. XEQT's 25% Canada allocation may actually be appropriate or even slightly overweight relative to your total financial picture.

The Trump wildcard

The most honest thing anyone can say about the tariff situation is that it depends heavily on what one person decides to post on Truth Social on any given morning. That is not hyperbole. A single late-night post from Mar-a-Lago has moved Canadian equity markets by multiple percentage points in either direction.

This is genuinely new territory for markets. Political risk of this specific character, originating from a single head of government's social media account, is not something historical data can fully model. The 2018-2019 trade war was a useful precedent but this one moved faster, hit harder, and was reversed and re-imposed more chaotically.

The CUSMA review in mid-2026 is the single most important event to watch. If Trump moves to weaken or exit CUSMA, the 85% exemption that protects the vast majority of Canada-US trade disappears. That would be a structural change, not a headline-driven one. It would require a genuine reassessment.

Until then, the playbook from every previous episode holds: the single best investment decision you can make during tariff volatility is to make no decision at all.