As the US-Canada trade war intensifies, Doug Ford, the leader of Canada’s most populous province, has stormed onto the battlefield with a series of bold offensive strikes.
A day after it was applied, on Tuesday Ontario suspended a 25% surcharge on electricity exports after Premier Ford received an invitation to meet with Commerce Secretary Howard Lutnick in Washington on Thursday.
The surcharge would have impacted consumers in Michigan, Minnesota and New York, adding $277,000 in daily costs for 1.5 million U.S. homes and businesses, according to the province. Ford had also said he would not “hesitate” to raise the surcharge or cut off electricity supply altogether.
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“Canada and Ontario didn’t start this trade war with President Trump, but Team Canada is ready to win it,” said the Premier of Ontario in a recent post on X. “As a first step in our response, Ontario will rip up our contract with Starlink, take U.S. alcohol off LCBO’s shelves and ban U.S. companies from government procurements.”
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The contract with Starlink, run by Elon Musk’s SpaceX, was worth $100 million and was first signed in November 2024 to deliver satellite internet to rural and northern communities in Ontario. Meanwhile, the Liquor Control Board of Ontario, or LCBO, is a significant importer of U.S. booze, buying more than 3,600 products from 35 U.S. states worth roughly $670 million annually, according to a press release about the “operational step.”
In an interview with CBS, Ford said retaliatory moves will remain in place until U.S. tariffs on Canada are completely called off and “chaos” has been mitigated.
“There’s uncertainty right now, you know nothing’s worse than uncertainty for investors, for people, for the market,” he told Ed O’Keefe, pointing to the fact that the U.S. stock market has shed trillions of dollars in recent weeks.
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“[Trump] ran on a mandate to create jobs and lower inflation. It’s worked totally opposite so he needs to straighten this out.”
With limited visibility on the future of this trading relationship, investors on both sides of the border are scrambling to figure out how to protect their portfolios. Here are three ways to bolster your finances for a protracted economic war.
Limit exposure
Although importers and exporters are on the front lines of this trade war, the impact is likely to reverberate across the whole economy. Fewer sales of Kentucky bourbon could prompt distilleries to lay off workers who are then less inclined to purchase cars, renovate homes or take vacations.
U.S. job losses hit a 16-year high in February, according to a report by Challenger, Gray & Christmas. Consequently, economists at J.P. Morgan Chase have raised their probability of a recession to 40%.
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Although an economic downturn isn’t guaranteed, you could consider limiting exposure to industries that are exposed to tariffs, such as auto parts and retail.
Boosting your cash position and moving to high-yield Treasuries could also limit downside risks in your portfolio. Warren Buffett certainly seems to be taking that approach with over $318 billion in cash and cash equivalents on Berkshire Hathaway’s balance sheet at the end of 2024.
Read more: Jamie Dimon issues a warning about the US stock market — says prices are ‘kind of inflated.’ Crashproof your portfolio with these 3 rock-solid strategies
Bet on domestic substitutes
In theory, a surcharge on imported goods should benefit domestic suppliers. So, if electricity sourced from Ontario faces a 25% hike, domestic utility company Xcel Energy Inc. (XEL) should stand to benefit. The Minnesota-based firm has 3.9 million electric customers across eight states. The stock is up 2.6% year-to-date, while the S&P 500 is down 5.12% over the same period.
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However, the benefits of protectionism for some of these companies could be offset by declining consumer sentiment and industrial production in other parts of the economy.
An additional kilowatt of electricity consumed by someone who relies on Ontario’s energy exports could be offset by less electricity consumed by a worker who was laid off from the local beer factory because of Ontario’s import restrictions.
Safe haven
Many investors turn to gold as a safe haven during times of turmoil and uncertainty. The price of an ounce of gold is up 13% over the past six months, which indicates that this rush to safety is already underway.
If the trade war continues, or intensifies, investors could hedge against the risk with some gold exposure in their portfolio.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.