How can advisors, investors manage unrelenting uncertainty

It can feel like every new development in the saga that has been US tariff policy raises more questions than it answers. That was certainly the case when the Supreme Court struck down President Trump’s tariffs, declaring their justification under the International Emergency Economic Powers Act (IEEPA) as unlawful. For countries and businesses impacted by US tariffs, the immediate relief has been followed by a new slew of tariffs and further questions about what the future holds.

For Macan Nia, Co-Chief Investment Strategist at Manulife Investment Management, this latest development simply adds to the heightened levels of economic and market uncertainty that advisors and investors have been struggling with for over a year now. He noted, though, that with changes in these policies come some new forms of opportunity and potential upside, as well as new areas of risk to monitor. He stressed the role of proper portfolio construction and discipline in navigating this cycle.

“Humans like certainty. Investors like more certainty. And all this has done is created more uncertainty over the next five months,” Nia says, citing the new law under which global tariffs have been implemented. “It's hard to get a gauge of the impacts when you're not really confident in what the actual outcome will be. I think one interesting thing that may be getting overlooked, based on a couple external sources that I've seen like the Yale Budget Lab as an example, is that under the new tariff rates, if they are held legal, the global tariff rate has come down from what it was initially.”

Nia makes the point, as well, that while this uncertainty is still being digested by markets, it can be seen as far less shocking than the initial onset of tariffs early last year. Where ‘Liberation Day’ caused a spike in US tariff rates from low single-digits to high teens, globally, this new 15 per cent global rate is a marginal increase, or even decrease, for US trading partners.

The reality of tariffs has now largely been digested by markets, and while spikes in uncertainty in these moments may occur, Nia notes that businesses have already found ways to absorb these costs and, in certain cases, pass them on to consumers. US Federal revenues collected from tariffs, too, are potentially supporting further economic stimulus measures like the Big Beautiful Bill. One of the new questions arising from the Supreme Court decision, Nia notes, is the potential recourse for businesses and consumers to be repaid for the costs of the IEEPA tariffs. If repayments start to be made, that could also prove stimulative to the US economy.

Tariffs had been one key way the Trump administration has tried to offset significant deficits. This potential hit to revenue, however, has not yet been challenged by the so-called ‘bond vigilantes.’ Treasury yields have not yet spiked, Nia says, and have actually come down somewhat. He notes that there could be some action as those players digest the news, weighing it against other economic or geopolitical stories like the ongoing AI wave and risks in the Middle East.

While Canada may be one of the beneficiaries of this ruling, given it struck down the tariffs on all goods not covered by the Canada US Mexico Agreement (CUSMA), that trade deal is up for renegotiation in June. Broader trade uncertainty, Nia says, raises further unknows around CUSMA renegotiations. Nia takes some hope, however, from Trump’s apparent unwillingness to fully destabilize markets. Given the degree of interdependence between the US and Canada, he believes that renegotiations are unlikely to stray into a place of real destabilization.

In light of all these themes and challenges, Nia says his firm’s investment process remains unchanged. Their approach, he says, is to control what they can control. They can look at the macro environment and see a state of neutral growth, with supportive tailwinds as well as challenging uncertainty. Accommodative monetary policy, he notes, should be positive for corporate earnings. Fiscal stimulus also provides some backing for stocks. Valuations on certain stock markets remain a concern, but Nia sees the macro backdrop as broadly supportive despite uncertainty.

That uncertainty, he says, is largely coming in the form of headline risks with short-term implications. Fundamentals, he says, offer better long-term instruction for investors and advisors. There are reasons to add in vehicles that can offset volatility, such as precious metals and assets with other elements of downside protection, but Nia says that advisors need to remain cognizant of the growing correlations between equities and bonds.

“If there's these ‘bump in the night’ headline risks, equities and bonds could both sell off together. Where's the protection for end clients? It's finding asset classes that are uncorrelated potentially with those two asset classes,” Nia says. “The discussion we're having with clients is look at your goals, look at your return expectations. Have you met them? Now's not a bad time to rebalance.”