Refer a Business
Investor LoginKeeping Tabs on a Shifting Landscape: How Tariffs and Policy Changes Impact Private Equity Portfolios
5 min read April 30, 2025
In today’s investment environment, one thing is clear — the rules are constantly changing. From shifting trade policies to unpredictable tariff announcements, investors are navigating a global market that feels more volatile and more reactive than ever. For private equity managers, this creates both challenges and opportunities.
Three Buckets, Three Different Stories
When we look at our portfolio, we can classify our companies into three distinct groups:
- Domestic-Only Businesses
These are companies that operate solely within Canada, like Clearpoint — a healthcare services provider that does business exclusively in its home market. For these businesses, the direct impact of tariffs is negligible. - U.S. Domestic Companies
A second category includes firms like Echodyne, a radar technology company based in Seattle. Focused on U.S. Homeland Security and other American clients, these companies are largely insulated from cross-border trade tensions. - Cross-Border Players
The final group — representing less than 20% of our portfolio — includes businesses engaged in cross-border and international trade. For these firms, the tariff impact matters. With policies shifting quickly, our management teams have been using this time to think strategically and tactically about how to navigate these potential headwinds.
Tariffs as a New Macro Risk
While 2025 started strong for public markets, new risks have emerged. Tariffs have become the topic du jour as decision-making whiplash from the U.S. administration sends ripples through the global economy. Announcements like the 90-day postponement of reciprocal U.S. tariffs offered a temporary reprieve, but markets remain unsettled, especially with escalating tensions between the U.S. and China.
Retaliatory tariffs in excess of 100% are already in place between the two nations, and the potential for further escalation adds uncertainty to future earnings and valuations. The rate of supply chain re-orientation which began as Covid spread, has accelerated. Domestic manufacturing and assembly in both Canada and the U.S. along with related modern automation present meaningful opportunities.
Why Private Equity Still Works
This is exactly why private equity belongs in a diversified portfolio. It acts as a stabilizer and a shock absorber, especially during periods of market volatility. Unlike public equities, which can react sharply to every policy headline, private companies benefit from a longer-term approach to valuations.
In recent months, we’ve had productive boardroom conversations about scenario planning — what tariffs could mean for suppliers, customers, and margins. The beauty of private equity is that our management teams aren’t forced to react overnight. They have the ability to be thoughtful, measured, and tactical in adapting to a changing world. And they have the ability to react quickly in response to opportunities.
Finding Certainty in Uncertainty
Yes — the environment is evolving. Yes — global trade relations are in flux. And yes — uncertainty remains high. But if history has shown us anything, it’s that financial markets eventually regain their footing. Private equity, with its long-term perspective and active management, offers a valuable layer of resilience when public markets are unsettled.
As we move through 2025, we’ll continue to monitor developments closely, adjusting strategies where needed and focus on creating value for our investors — regardless of which way the political winds blow.