Dealing with the stress of a Canada-U.S. trade war

Photo: The Canadian Press/A.P.

U.S. President Donald Trump's tariffs on Canadian goods entering the U.S. could spark a trade war between the two countries..

Many Canadians have been feeling the strain of financial stress for some time now, with rising inflation, higher interest rates and an increasingly expensive cost of living.

Now, with the United States engaging in another round of trade wars, there’s an added layer of uncertainty and potential economic fallout.

While the full impact on Canada remains to be seen, these global tensions can make an already stressful financial environment feel even more daunting. With so much noise and speculation, it’s crucial to separate fact from fear and take proactive steps to manage financial stress.

Here’s what Canadians should consider right now:

What does a U.S. trade war mean for Canadians?

Trade wars create economic uncertainty, affecting markets, businesses and consumers. If the U.S. imposes tariffs on goods from key trading partners, including Canada, it could lead to higher prices, disruptions in supply chains and economic slowdowns in industries reliant on cross-border trade. Some sectors, such as manufacturing, agriculture and technology could experience more pronounced effects than others.

For consumers, that could mean more expensive goods, particularly those that rely on materials from the U.S. or impacted countries. If businesses struggle with rising costs or declining exports, job security could become a concern in some industries. On the investment side, markets tend to react strongly to trade uncertainty, leading to increased volatility.

Managing financial stress in uncertain times, so:

1. Stick to facts, not fear

The news cycle thrives on dramatic headlines and financial markets can be highly reactive. While it’s important to stay informed, be cautious about misinformation or worst-case scenario predictions that may not reflect reality. Look to credible sources of information for fact-based insights rather than getting caught up in social media panic or relying on news sources that are politically slanted.

2. Don’t let emotions drive financial decisions

Economic uncertainty can trigger fear-based decision-making, whether it’s panic-selling investments, hoarding cash or making impulsive changes to financial plans. History has shown that markets and economies go through cycles of ups and downs.

Equally damaging is selling investments domiciled in a certain country based on those same emotions, even though those investments may be far safer than the ones you choose to move to. Making long-term financial decisions based on short-term emotions often leads to poor outcomes.

If you’re feeling anxious about your investments, consider speaking with a financial professional before making any drastic moves. Staying the course with a well-diversified investment strategy is often the best approach.

3. Focus on what you can control

You can’t control global trade policies, but you can control your personal financial decisions. Now is a good time to revisit your household budget, reduce unnecessary expenses, and bolster your emergency fund if possible. Having a financial cushion can provide peace of mind in times of uncertainty.

4. Assess your job and industry risk

If your job is in an industry that could be heavily impacted by a trade war, it might be a good idea to have a backup plan. That doesn’t mean panicking but rather considering steps to improve job security or develop new skills that could make you more adaptable in a changing economy. If you're a business owner, diversifying suppliers and revenue streams could help mitigate potential risks.

5. Avoid making big financial commitments on speculation

If you’re thinking about making a major financial decision, such as buying a home, expanding a business or taking on significant debt, consider whether it makes sense based on your personal financial situation rather than speculation about the economy. Uncertainty shouldn’t automatically stop you from moving forward with financial goals but it does mean you should be especially diligent in your planning.

Should Canadians take action or stay the course?

For most people, the best course of action is to stay the course while making prudent adjustments where necessary. Panicking and making drastic changes often lead to poor financial outcomes. Instead, focus on strengthening your financial foundation, staying informed with reliable sources, and keeping a level head.

Economic uncertainty isn’t new,and while trade wars can create disruptions, they don’t last forever. By maintaining a disciplined approach to finances, staying adaptable, and filtering out unnecessary noise, Canadians can navigate this period with confidence and resilience.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.