BJK Financial Group Blog

As I look back on 2025, the word that keeps coming to mind is resilience—not in the motivational-poster sense, but in the hard, data-driven reality of how markets and the Canadian economy absorbed repeated shocks and kept moving forward.

I’ll be candid: I did not expect this year to play out the way it did. With U.S. tariffs flaring across sensitive sectors and the constant headline risk that comes with President Trump’s approach to trade and policy, I genuinely thought we’d be staring at a market free fall by now. Instead, what we got was a year that forced investors to relearn an old lesson: markets can be remarkably forward-looking, and they can remain buoyant longer than our instincts (or our news feeds) suggest.

Markets: “Bad News” Didn’t Break the Tape

From a Canadian investor’s perspective, the equity story in 2025 was difficult to ignore. By early December, National Bank’s equity monitor noted the S&P/TSX was up roughly 30% year-to-date through November—an eye-catching number given how often the year was framed as a trade-war grind. National Bank TMX also highlighted that Canadian equities showed relative resilience in the face of unresolved tariff threats and trade tensions during the first half of the year. tmxinfoservices.com

What stood out to me wasn’t just the magnitude of returns, but the market’s ability to compartmentalize. Tariffs and geopolitics were treated as real risks, yet not always “systemic” ones—particularly when investors believed supply chains could adapt, governments could negotiate carve-outs, and central banks had room to move if growth softened.

The Economy: Holding Up—But Not Evenly

Canada’s real economy did not glide through 2025 untouched. In fact, we ended the year with a reminder that resilience can include sudden stumbles. Statistics Canada data reported in late December showed GDP contracted 0.3% in October 2025, with a partial bounce expected in November.  Manufacturing and other goods-producing areas were pressured, and tariff effects were specifically cited as a factor weighing on certain industries. Reuters

This is where the story becomes very regional. National headlines can hide how concentrated the pain is.

Ontario: Auto and Steel Felt the Tariff Reality

Here in Ontario, the tariff narrative was not theoretical. The Ontario government’s 2025 Fall Statement explicitly flagged that U.S. tariffs were impacting the competitiveness and viability of automotive and steel manufacturing, along with the livelihoods tied to cross-border trade. Ontario Budget

The Financial Accountability Office of Ontario (FAO) went further with scenario analysis earlier in the year, estimating meaningful job impacts under a tariff scenario and projecting a higher unemployment rate over the 2025–2029 outlook compared to a no-tariff baseline. FAO Ontario Whether one agrees with every assumption in scenario modelling, the direction is clear: Ontario’s manufacturing engine is particularly exposed when tariffs hit autos, parts, steel, and aluminum.

Trade Policy: A Year of Counters, Carve-Outs, and Ongoing Negotiations

On the policy front, 2025 was marked by both retaliation and restraint. The federal government’s own tariff guidance shows that Canada removed many counter-tariffs effective September 1, 2025, while keeping counter-tariffs in place on steel, aluminum, and automobiles. Canada+1 Meanwhile, Global Affairs Canada’s Trade Commissioner resources provide a useful timeline of U.S. actions under Section 232, including tariffs on steel/aluminum and on automobiles and parts—with important nuance around CUSMA compliance and U.S.-content exemptions. Trade Commissioner Service

This push-and-pull is exactly why I keep describing the environment as “volatile.” Even when the direction of policy is known, the scope, the timing, and the exemptions can change quickly—and markets are constantly repricing those probabilities.

The Green Transition: Momentum Delayed, Not Deleted

Another major theme this year was the U.S. shift away from aggressive climate and EV policy, which I believe has contributed to a delay in the green transition—especially in the auto sector that straddles the Canada–U.S. border.

From the Canadian side, there was continued emphasis on Canada’s EV policy framework, including references to Canada’s EV availability standard and the 2035 phaseout objective for new gas-powered vehicle sales. Environmental Defence At the same time, analysis out of Queen’s University noted the U.S. political intent and mechanisms that could be used to unwind or weaken EV-related policies and vehicle emissions standards. Queen's Law In practical terms, when the U.S. hesitates, North American supply chains and investment timelines often hesitate too—because automakers build for scale, and scale is policy-sensitive.

My takeaway is not that the green transition is over; it’s that the path is likely to be less linear than many expected a few years ago.

Looking Ahead: Three More Years of “Trump Volatility”

If 2025 taught me anything, it’s that we should plan as though policy volatility is not a one-off event—it’s a base case for the next several years. The combination of trade measures, negotiation cycles, sector-specific exemptions, and abrupt narrative shifts can keep risk elevated even when markets are trending higher.

For investors, that reinforces the discipline I come back to repeatedly:

• Diversification is not a slogan; it’s a volatility-management tool.
• Time horizon matters more than headlines.
• Risk capacity and risk tolerance should be revisited when the world changes—but not rewritten every time the news changes.

I was surprised by 2025—mostly because the market refused to validate the worst-case script. But I’m not taking that as a reason for complacency. I’m taking it as a reminder to stay structured, stay diversified, and stay realistic about what the next three years could bring.

This commentary is provided for general information and educational purposes only and does not constitute investment advice. Please consult with your advisor regarding your specific circumstances.