You can’t stop tariffs from rolling in. But you can be smart about how they hit your wallet.
Managing your budget can feel like playing financial Jenga — blindfolded. You’re trying to balance groceries, mortgage payments, and your kid’s soccer gear when a new round of U.S. tariffs blows in and wobbles the whole thing.
The good news? A few smart moves can help you steady the stack.
Let’s break down what’s happening, why it matters, and what you can do to stay financially resilient, even as the economic landscape shifts. Marc Sheared, CFA and Portfolio Manager at Vancity Investment Management, also weighs in with his expertise.
Why you should care about tariffs.
While the tariffs affect American buyers directly, the ripple effects can hit both sides of the border. Even products made in Canada can be affected when materials or components are sourced in the U.S.
After the U.S. imposed a 25% tariff on Canadian automobiles, for example, Canada added a 25% tax on cars and trucks from the U.S. that don’t meet the rules of our trade agreement (CUSMA). Even vehicles that do follow the rules could still face extra fees if they contain too many parts from outside Canada or Mexico.
Tariffs especially impact the auto industry, where cars cross the border multiple times. “We’ve already seen one European manufacturer temporarily shut down a Windsor plant,” says Marc Sheard. If production slows, it could trigger job losses and reduced consumer spending.
Canada has met other U.S. tariffs in kind, too. The Canadian government states that they have “a comprehensive plan to fight back against the unjustified U.S. tariffs imposed on Canadian goods while supporting Canada’s interests, industries, and workers.”
How tariffs are affecting your finances.
Tariffs are one more pressure point in an already tight economy. On March 4th, 2025, Canada imposed tariffs on $30 billion in goods imported from the U.S. These goods include products like orange juice, wine and beer, appliances, and apparel, among others. You can see a full list of U.S. products subject to 25% tariffs here.
You may have already noticed tariffs impacting you in a few different ways.
- Are your grocery bills creeping up? Coffee, chocolate, nuts, and produce like avocados cross the border before they hit our shelves.
- Are your household goods getting pricier? That Whirlpool dishwasher or even a pack of Clorox wipes may cost more.
- Small businesses in your neighbourhood could be struggling. Think of your local bike shop or cafe — if their inventory costs more to bring in, they either raise prices or eat the loss.
- Need a new vehicle? Tariffs mean price hikes on popular models like the Ford F-150.
“The auto sector is highly integrated across North America, with the average car crossing the border 7-8 times, which means tariffs will be levied on each crossing,” says Marc Sheard.
With some clever strategizing, you can minimize the impact tariffs have on your bottom line.
How to navigate this economic reality: Five tips for your budget.
What can you do when tariffs cause prices to rise? Here are five simple, practical ways to stretch your budget, stay on track, and keep your money in your home country.
- Shop local. Canadian-made goods may be tariff-free and support your community. Keep your eyes out for the Canadian flags on Canadian-made products.
- Plan big buys. Research price changes before purchasing big-ticket items.
- Audit your spending habits. Track a month of expenses. You might spot easy cutbacks.
- Support small businesses and keep your community strong. If your budget allows, keep your cash local. Canadians never cease to impress when it comes to helping out our neighbours.
- Cut down on non-essentials. Cut the fluff — pause that streaming service. Pack lunch. You know the drill.
How to stay financially resilient with advice from an expert.
Marc Sheard weighs in on how Canadians can weather the storm.
When it comes to how tariffs will impact the average Canadian, Marc says that “Although the current situation is stressful, it is fluid with the U.S. already instituting a 90-day pause on reciprocal tariffs above 10% on all countries except China.” He explains that these constant policy changes have “created a lot of uncertainty and made it difficult to quantify the exact impact the tariffs will have on Canadians.”
Marc says that because the U.S. is our main trade partner, if these tariffs persist, then we can expect them to have a material impact on our economy in two key areas:
- Lower demand for Canadian goods.
U.S. tariffs, Marc says, “will make our goods more expensive to Americans as it is basically a tax paid by the companies and consumers that are importing the goods.” If Canadian goods are more expensive, then American buyers will look for alternatives. This will create “a difficult environment for businesses that can no longer compete on price with goods that are replaceable from sources within the US.”
- Increase in the price of goods imported from the U.S.
Tariffs make Canadian goods pricier for American buyers, which hurts demand. They also raise costs on U.S. imports, most of which get passed on to consumers.
“Most economists agree tariffs are inflationary,” Marc says. The long-term fix? Diversifying trade beyond the U.S.
The current trade war is an opportunity for the Canadian government to look for trading partners outside of the US. “We are a country with abundant resources that many countries need, which puts us in an enviable position relative to many other countries,” says Marc. “Although difficult in the short term, this could lead to many positives over the medium to long term. As the saying goes, necessity is the mother of invention.”
The current trade war is an opportunity for the Canadian government to look for trading partners outside of the US.
Steps you can take today to stay financially resilient.
We’re living in a challenging time, economically and politically. But Marc reminds us that “it’s important for each of us to do what we can to plan and be ready for any potential increase in costs or disruption of income.”
With the high cost of living, it can be difficult for people to save money. Marc says to look at “options and opportunities to expand or develop skills that broaden alternative employment opportunities or productivity growth. Follow a passion where possible and channel the anxiety and uncertainty that uncertain times can create into personal growth.”
What you can do about stock market volatility.
If you’re feeling anxious about the markets or your investments, remember that it’s a marathon, not a sprint. Sticking it out for the long run will have positive effects. “Although market volatility is uncomfortable, it’s important to remember that short-term volatility in the stock market is quite normal,” Marc reminds us.
If you’re feeling anxious about the markets or your investments, remember that it’s a marathon, not a sprint. Sticking it out for the long run will have positive effects.
Since 1980, “the S&P 500 has experienced an average intra-year drop of just over 14%. Despite this, it has had a positive annual return in 34 of those 45 years, so just slightly more than 75% of the time,” says Marc. And short-term volatility is nothing new. “The stock market is a brilliant compounding machine, but short-term volatility is an inherent feature and is the price of admission. Time and again, the market tends to rebound quite favorably following these corrections, which is why it is so important not to panic.”
Holding on will pay off. Marc says, “The best days in the market tend to occur not long after the worst days, as we have witnessed over the past couple of weeks.”
What you should do about a potential recession.
Can tariffs increase inflation and push Canada into a recession? It’s tough to say, says Marc. “It’s very difficult to predict macro events such as a recession, especially in the current environment where U.S. policy is changing so frequently.”
The current tariff situation with the U.S. “will have a negative effect on growth and increase inflation in both Canada and the global economy,” says Marc.
That being said, it’s important to remember that “central banks like the Bank of Canada can adjust interest rates to manage their respective countries through recessions or inflationary periods,” says Marc.
The government of Canada’s fiscal policies (like infrastructure spending) can stimulate a slowing economy. “Periods of economic slowdown can be good times for the government to effectively and efficiently invest in the country and build out infrastructure,” says Marc. This happens at a time when “the government will not be competing for resources from the private sector during periods of slow or decelerating economic growth. This infrastructure build-out can provide the necessary support for future economic growth.”
What you should know about tariffs and the current economic situation.
Marc reminds us that “the situation is changing on a day-to-day basis, and nobody knows how or when it will end.” But he says that it’s helpful to learn from history in situations like this.
Over the last 20 years, we have had three major market drawdowns. “The great financial crisis in 2008, the pandemic in 2020, and the war in Ukraine in 2022. Not long after each of these events, the markets quickly recovered and led to some very strong bull markets.”
And yes, the current situation is unique from these historical events. Marc says, “It is self-inflicted and has created a trade war unlike anything we have ever witnessed, but each of the above situations was also unique. The great financial crisis brought us to the brink of a global financial system collapse, while the initial belief in early 2020 was that it would take years for a vaccine to be produced and distributed.”
“It’s never easy to remain calm when you’re in the eye of the storm,” says Marc. “But history has shown us time and time again that we should stay optimistic. Everyone craves certainty, as does the stock market, and right now, we are very much in uncertain times, so it’s important to remain level-headed and calm.”
The bottom line: You can only control how you respond to tariffs.
Tariffs may be set by governments, but how you respond to them is up to you. By staying informed, paying attention to where you spend your money, and working with a trusted financial partner, you can navigate economic uncertainty with confidence.
If you’re feeling unsure about how these changes will affect your financial future, we’re here to help. Connect with a Vancity Wealth Management Professional to talk through your options and build a plan that works for you.
The information contained herein has been provided by Vancity Investment Management for information purposes only. It does not constitute financial, tax or legal advice. Always consult with your Portfolio Manager or a qualified advisor prior to making any investment decision. The information has been obtained from sources believed to be reliable, however we cannot guarantee that it is accurate or complete. Any reference to past returns, charts, or graphs are for illustrative purposes only and are not indicative of future performance.
