The U.S.-Canada trade relationship has been called the most successful economic partnership in the world, but lately that relationship is being tested. With fresh tariff proposals emerging from Washington and ongoing disputes over key sectors, Canadians approaching retirement are increasingly questioning how these trade tensions could impact their financial security.
When Margaret Wilson, 63, from Mississauga recently reviewed her retirement portfolio, she noticed something concerning. “Almost 40% of my investments are tied to U.S.-Canada trade in some way,” she told me during a community finance workshop last week. “I’m wondering if I should be diversifying more given all this tariff talk.”
Margaret isn’t alone. A recent RBC Retirement Research Centre survey found that 67% of Canadian pre-retirees express anxiety about how international trade relationships might affect their retirement plans. This concern has grown by 23 percentage points since 2021.
The current trade landscape certainly gives them reason to worry. The Biden administration has proposed aluminum tariffs that could significantly impact Canadian exports, building on the steel and aluminum tensions that began during the Trump years. Meanwhile, disputes continue in the dairy, lumber, and automotive sectors despite the CUSMA agreement (formerly NAFTA) that was supposed to stabilize trade relations.
“What makes this particularly concerning for retirement planning is the timing,” explains Dr. Amrita Singh, economist at the University of Toronto. “We’re seeing these trade pressures at exactly the moment when baby boomers are transitioning to fixed incomes, making them especially vulnerable to market volatility triggered by trade uncertainty.”
The numbers tell a sobering story. Canadian exports to the U.S. represent roughly 75% of our total exports and about 20% of our GDP, according to Statistics Canada data. Any significant disruption in this relationship ripples through pension funds, retirement savings, and the broader economy.
Take the forestry sector as an example. Ongoing softwood lumber disputes have resulted in Canadian producers paying approximately $6 billion in duties since 2017. Companies like West Fraser and Canfor, commonly held in Canadian retirement portfolios, have seen earnings volatility that directly impacts dividend stability – a key income source for retirees.
“It’s not just direct investments that matter,” notes financial advisor Jaspreet Kaur. “Many Canadians don’t realize how deeply integrated our economies are. Your retirement income could be affected by trade disputes even if you don’t own shares in the directly targeted industries.”
The Bank of Canada has flagged these trade uncertainties as a significant economic risk factor. Deputy Governor Sharon Kozicki recently noted that trade tensions create “uneven impacts across different regions and demographic groups,” with older Canadians potentially facing greater challenges in adjusting their financial strategies.
For those approaching retirement, the question becomes practical: how to protect savings from trade-related volatility?
“Diversification remains the cornerstone advice,” says Trevor Hamelin, portfolio manager at BMO Wealth Management. “But that doesn’t just mean geographic diversification. It means looking at sectors that might be more insulated from bilateral trade disputes.”
Hamelin suggests that pre-retirees consider increasing allocations to utilities, telecommunications, and certain healthcare segments that serve primarily domestic markets. He also notes that government bonds, despite lower returns, provide stability during periods of trade-induced market turbulence.
The Canada Pension Plan Investment Board (CPPIB) has been actively adjusting its strategy in response to these concerns. Their latest quarterly report highlights increased investments in Asia-Pacific markets and European infrastructure – moves designed partially to hedge against North American trade uncertainties.
Beyond investment strategies, policy advocacy groups representing seniors are becoming more vocal about trade issues. The Canadian Association of Retired Persons (CARP) recently launched a campaign urging federal negotiators to prioritize sectors with high retirement impact during trade discussions.
“We need to recognize that trade policy is retirement policy,” says CARP’s chief policy officer Maria Zhang. “When Canadian exporters face barriers, it’s often retirees who bear the burden through reduced dividends, market volatility, and potentially higher consumer prices.”
Looking ahead, the Canada-U.S. trade relationship faces several critical junctures that retirement planners should watch. The upcoming U.S. election could significantly alter trade dynamics, as could Canada’s response to proposed Buy American provisions in infrastructure spending.
For individual retirement planners like Margaret Wilson, experts suggest a balanced approach: stay informed but avoid reactive moves.
“The worst thing pre-retirees can do is make dramatic portfolio changes based on headlines,” advises Kaur. “Instead, use this moment to evaluate whether your retirement income sources are appropriately diversified against geopolitical risks.”
Perhaps the most practical advice comes from Dr. Singh: “Remember that the Canada-U.S. relationship has weathered trade disputes for decades. While preparing for volatility makes sense, catastrophizing rarely leads to good financial decisions.”
As Canada navigates these complex trade waters, those eyeing retirement would be wise to consult financial advisors about portfolio stress testing against various trade scenarios. The goal isn’t to predict specific outcomes but to ensure retirement plans can withstand the economic ripples that may come from our most important international relationship.
For Canadians whose golden years depend on golden trade relationships, strategic planning rather than panic remains the wisest course.
