2025 started ominously for Canada: President-elect Trump vowed to use "economic force" to coerce Canada into becoming the 51st state. Shortly after his inauguration, he followed up his words with action, unleashing a barrage of tariffs against Canadian goods.
Economists predicted a severe recession for Canada. The Canadian government retaliated with counter-tariffs on goods like alcohol. A grassroots "elbows up" movement started where Canadians boycotted American goods and used their wallets to support Canadian businesses instead.
Meanwhile Trump launched tariffs on the rest of the world too. Goods from China, Europe, Japan, obscure places in Africa, all got hit.
Investors were alarmed. Tariffing all goods entering the USA would make inflation sticky, making American consumers struggle even more. Which had implications for the profits of American corporations.
Diversifying out of American stocks suddenly became imperative.
Canada's stock-market started to look attractive. Especially as investors noticed that Trump had been unable to put tariffs on CUSMA-compliant goods as the CUSMA trade deal had been ratified by Congress.
As a result, Canadian goods entering the US had the fewest tariffs applied to them. And the Elbows Up movement supported domestic Canadian sales.
Money rushed into Canadian stocks, which returned 36.5% in 2025:
In Jan 2025, economic commentators thought the Trump presidency would be brilliant for American stocks and businesses, while proclaiming the Canadians to be "finished". But the Canadians had the last laugh along with anyone who put money in Canadian stocks.