On February 1, 2025, U.S. President Donald Trump announced a 25% tariff on imports from Canada and Mexico, citing concerns over illegal immigration and drug trafficking. Additionally, he imposed a 10% tariff on Chinese imports, which has already taken effect. 

Both Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum opposed the tariffs. Initially set to start on February 4, the U.S. postponed them for 30 days following negotiations. In response, Canada and Mexico agreed to increase border security measures to address U.S. concerns. 

Despite the delay, the announcement led to market volatility, with global stock markets seeing some declines. Investors remain cautious as trade disputes could increase prices and fuel inflation. 

Economic Considerations 

Trade with Mexico and Canada represents nearly 30% of total U.S. imports, making these relationships important to Trump’s agenda. He has consistently criticized trade deficits and used tariffs as a tool to rebalance trade relations. 

According to JP Morgan, Canadian and Mexican exports to the U.S. are concentrated in transportation, automobile manufacturing, energy, and agriculture. These industries are highly integrated, so tariffs may disrupt supply chains if fully implemented. 

For China, the economic effects remain to be seen, particularly since the U.S. imports far more from China than it exports. China dominates supply chains for technological hardware, critical minerals, and clean technology, giving it leverage over the U.S. in trade negotiations.  

Domestic production would be the best way to reduce this dependence, and the United States is investing in those capacities. And this is where we believe funds like VAM US Mid Cap will benefit. Read our article on Trump 2.0 and VAM US Mid Cap here (https://www.astraworldwide.com/post/trump-2-0-shakes-markets-astra-worldwide-shields-your-investments). 

Our Key Takeaways 

• We saw market volatility surge after Trump’s initial tariff announcement and subsequent delay. 
• Trump’s goal appears to be policy leverage, not long-term revenue from tariffs. 
• Following an agreement with Mexico and Canada, he paused the tariffs, reinforcing the idea that his objective is to negotiate deals, not sustain tariffs that could hurt the U.S. economy. 
• Trump successfully ‘tested the waters’ and may now shift focus to the EU, possibly imposing tariffs to negotiate defense spending in NATO. 
• Markets initially fell but rebounded a bit after the U.S. announced respective deals with Canada and Mexico. A similar reaction may occur if tariffs are imposed and postponed on the EU as they are U.S. allies, but China’s case is different and may have longer-term effects. 
• We believe in the short term, tariffs will serve as bargaining chips, as higher inflation would not be in the U.S. interest. 

Astra Worldwide Steps Up to Protect Your Portfolio 

Trump’s approach, aimed at securing better trade terms for the U.S., often caused markets to wobble, as his bold policies introduced uncertainty and volatility. With market fluctuations likely to persist, active management is more crucial than ever.

Astra Worldwide is stepping up to safeguard our clients’ wealth, offering strategic guidance and tailored solutions to navigate an increasingly complex global economy.

• We diversify investments to reduce exposure to single sectors or countries, limiting the impact of market disruptions. 
• We actively manage portfolios, addressing risks and seizing opportunities before issues arise. 
• For example, we recommended the Bowmoor Global Alpha Fund and Sanlam AI Managed Risk Fund to clients.  
• Bowmoor is a trend following fund that does well in volatile times. Sanlam uses AI to adjust its equity and cash holdings weekly, increasing cash exposures during market corrections. 
• Both funds have low equity market correlation and performed well in January, even amid volatility caused by DeepSeek. Read more about DeepSeek and the Sanlam AI Fund here (Sanlam AI: https://www.astraworldwide.com/post/the-future-of-investing-ai-driven-risk-management-by-sanlam) (DeepSeek: https://www.astraworldwide.com/post/astra-worldwide-stays-ahead-as-deepseek-sparks-global-ai-tech-selloff). 

Want to protect your investments and keep them growing in an unpredictable world? Reach out to Astra Worldwide today. Our professional Financial Advisors are here to help secure your portfolio for you and your loved ones in these uncertain times. 

What does the future hold: 

For traditional allies of the US like Canada, Mexico the EU who have stood side by side with the US through wars these are uncertain and worrying times. Many thought the first ‘Trump Presidency’ was a one off and that the ‘Make the US Great Again Policy’ would not happen again. Trump 2 is going to be worse than Trump 1 and many of the US’s key partners will start to see this as the ‘norm’ and work to build other more reliable partners. 

The irony is that the policies for ‘Trump 2’ will likely benefit China as other countries begin to see them as a more reliable partner than the US. If China can adapt and be more pragmatic in its foreign policy, it is likely that it will benefit as countries who have generally been more comfortable towards the US get frustrated with the US and build stronger ties with China.  

Trump 2 is shaking up the world order and the beneficiaries in his mind are himself and his wealthy buddies. Trump does not care about the ‘ordinary Joe’ in the US who is going to become poorer under Trump. As Trump shakes up the US by cutting government the US will become a less desirable place to live for the many and a less reliable and sometimes hostile partner to its previous friends.  

Still, it is hard to understand what exactly all the changes will be and how they will affect investors. The key is being nimble and able to switch and adapt as policies change and the world order changes as well. 

For clients choosing where to invest in ‘normal times’ can be a challenge but going forward it will only get tougher and picking the wrong investments could drastically reduce your wealth.  Astra Worldwide are uniquely positioned to help clients make sense of all the noise and confusion so our clients can still sleep peacefully knowing their investments are constantly being monitored and adapted to a changing world. 

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