By Brad Brain
I started writing for the broken typewriter one year ago. My first column was on the Trump Tariffs.
Back then the idea of imposing tariffs on your historical allies and biggest trading partners was still just an ambiguous threat that most people were not taking seriously, myself included. To be honest, I really didn’t think Trump was actually going to implement something with legitimate heavy downside risk for such questionable upside benefit.
I am an economist. I like free markets. So do generations of economists and politicians before me. For decades North Americans have been trying to reduce barriers to trade, not impose new ones. Yet here we are.
Bear with me on this. I have some important points to make, which will have real life relevance for the common reader.
But first let me rewind the calendar. Recall what it was like back in January 2025. Our country was in political disarray. The Prime Minister had announced he is resigning, and at the time there was no clear succession. Donald Trump was newly elected after another close and controversial election, back in the White House but with less than fifty percent of the popular vote.
In this environment, Trump says some outlandish things. He talks about making Canada the 51st state. He talks about imposing tariffs on the U.S.A.’s trading partners.
Like many others, I thought Trump must have some kind of agenda. For whatever it is worth, my personal thoughts were that Trump could not seriously be considering such absurd policies. I thought he was just being opportunistic to try to extract some favourable concessions from what he may have perceived as a gap in Canadian leadership. Or maybe he was pandering to his base because of his own tepid election results. Distract people with something outlandish, but the real objective was something else, that kind of thing.
Because if Trump were to actually follow through with his threat of tariffs it is not us here in Canada that will pay them. It’s the American consumer that will foot the bill. A tariff is basically a tax on imports, paid by the American consumer. And the trade war that would inevitably follow the imposition of punitive tariffs will hurt almost everyone, Americans included.
So why would an American president want to make life more expensive for Americans? My guess was that it had to be a negotiating tactic. Surely, he can’t actually be considering something this dumb, could he?
Alas, I was mistaken. As we now know, Trump was indeed serious about taxing his own citizens, to the detriment of almost everybody, and to the benefit of virtually no one.
Let’s say I have a time machine, and I can travel back in time from today to when I wrote that first column in January of 2025. Since I know what is about to occur, I can tell you that not only does Trump follow through on his tariff threats, we are also about to face all sorts of serious additional economic and political challenges. All year long people are going to be worried about a hard-landing recession. The Ukraine war continues, threatening to drag NATO in. The Middle East risks military escalation. There will be ongoing worries about reduced demand from China slowing global growth. And so on. 2025 was exhausting.
Individually, any of these concerns is a plausible source of bad stock market performance. Surely if we suffered all of this and more, 2025 must have been a rotten year for the stock markets, right?
Wrong.
In 2025 the TSX Composite index returned about 29%, the best annual return in more than 15 years. The S&P 500 index was up almost 18%.
Here is the takeaway.
We can think we know what will happen in the short term, but that doesn’t mean that it will actually happen, and it doesn’t mean that the consequences will be what we expect.
I didn’t think Trump would enact tariffs. He did. I thought tariffs would be bad for the markets. They weren’t.
Good thing I did not let my expectations for the short-term impact my long-term investment strategy. If I had fell for the mental trap of thinking I can predict the future, then my clients would have missed out on some really good performance.
In my career I have seen people try to time the markets many times. It rarely works out. It’s almost always a good idea to keep your short-term predictions separate from your long-term investment strategy.
This is not new insight. Back in January 2025 I wrote, “Will the threats of tariffs actually materialize? Maybe. There isn’t much that you and I can do about that. What we can do is to stay focused on our own financial objectives. There are things that you will need to do in order to reach your Great Goals in life. Don’t let the potential for future tariffs, or any other noise, distract you from what you need to do.”
Those conclusions still stand. If anything, 2025 again proved them true.
Brad Brain. CFP, R.F.P., CIM, TEP is a Certified Financial Planner in Fort St John, BC. This material is prepared for general circulation and may not reflect your individual financial circumstances. Brad can be reached at www.bradbrainfinancial.com.