Earning power or sentiment? A test for every policy headline.
An election result is a signal. It is not a policy. The useful question is not who won, but whether any of the winner’s policies will affect the economy in its aftermath. Fundamentals set the climate; headlines set the weather. That distinction matters now, with Washington’s trade posture toward Canada still unsettled regardless of which party controls Congress.
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The earning power test
Last October I shared an investment review checklist. Two of its questions apply to every policy headline. The first is earning power. Does this development affect a company’s long-term ability to generate sales or cash? If not, it is noise. The second is whether the effect is temporary or permanent. If it does affect earnings, is the damage a passing setback or a lasting change? Temporary could be as long as a couple of years, depending on your investment horizon.
I would add one step. What is proposed and what is enacted are two different things, and enacted measures can take years to implement. The test applies once a measure is enacted. A campaign promise about tariffs is not an enacted policy. A proposed doubling of auto tariffs set for January 2027 is not yet in force. Fitch Ratings notes that the U.S. tariffs imposed in August apply regardless of CUSMA compliance and have no expiry date, though courts have not yet tested their legal basis. Only measures in effect and likely to persist are worth a conversation with your advisor.
Applying it across Canadian sectors
I look past the sector label to its customers, where production happens, input costs, pricing power and balance-sheet strength.
Ontario manufacturing and autos show why the label tells you little. Cross-border supply chains, CUSMA rules of origin and input costs all matter. Fitch Ratings notes that Ontario and Quebec face the greatest exposure through autos and aluminum, while the energy carve-out partly shields Alberta. Statistics Canada’s February 2026 survey showed Ontario transportation equipment sales up 24.7 per cent month over month. Nationally, the subsector was still 10.2 per cent below a year earlier. Two funds in the same sector can hold very different exposures.
Energy, industrials, materials and cross-border technology each warrant the same five-factor pass. While CUSMA remains in force until 2036, and its rules of origin still apply, the July 1 joint review did not produce a renewal. Annual reviews now provide a recurring forum for negotiation, the kind of lasting change the test is designed to catch.
What this does not justify
An election result is not a reason to reposition a portfolio. The cost of being out of the market rarely appears in the headline that prompted the move. That is why my checklist includes automating patience. We agree in advance how you will respond.
Steve’s Advice. Base your portfolio decisions on lasting earning power, not on election results.
Reviewing the whole picture
I look at sector concentration alongside your financing exposure, fixed-rate renewal timing and protection coverage. As a dual-licensed Investment Advisor, I look at the investment and protection sides together. The Bank of Canada’s October rate increase to 2.5 per cent makes that review timely.
Book a complimentary portfolio review
If you want to know how your portfolio holds up when policy headlines change, I invite you to book a complimentary portfolio review. Together we can look at your sector exposure, your financing and your renewal timing in one conversation.
Download The Retirement Blueprint, Vol. 2: Protecting Wealth
Download The Retirement Blueprint, Vol. 2: Protecting Wealth for a full guide to preserving what you have built. If you are a client, thank you for taking the time to read this and I look forward to our next conversation. Please feel free to share this with your friends and family who may be in need of another viewpoint.
Sources
- Bloomberg. “Trump vows to double Canadian auto tariffs, escalating fight.” The Star, Aug. 25, 2026. https://www.thestar.com.my/business/business-news/2026/08/25/trump-vows-to-double-canadian-auto-tariffs-escalating-fight
- Fitch Ratings. “Tariff escalation highlights risks for Canada; immediate impact limited.” Fitch Ratings, Sept. 9, 2026. https://www.fitchratings.com/research/sovereigns/tariff-escalation-highlights-risks-for-canada-immediate-impact-limited-09-09-2026
- Statistics Canada. “Monthly Survey of Manufacturing, February 2026.” The Daily, April 15, 2026. https://www150.statcan.gc.ca/n1/daily-quotidien/260415/dq260415a-eng.htm
- Global Affairs Canada. “Statement by Minister LeBlanc following trilateral CUSMA joint review meeting.” Government of Canada, July 1, 2026. https://www.canada.ca/en/global-affairs/news/2026/07/statement-by-minister-leblanc-following-trilateral-cusma-joint-review-meeting.html
- Rollat, Simon, Zvi Halpern-Shavim and Brady Gordon. “U.S. declines to renew CUSMA at first joint review: what businesses need to know.” Blake, Cassels & Graydon LLP, July 14, 2026. Republished by Legal 500. https://www.legal500.com/intelligence/canada/international-law/us-declines-to-renew-cusma-at-first-joint-review-what-businesses-need-to-know
- Bank of Canada. Interest rate announcement. Oct. 28, 2026. https://www.bankofcanada.ca/2026/10/fad-press-release-2026-10-28/
- McBride, Steve. The Retirement Blueprint, Vol. 2: Protecting Wealth. McBride Wealth Management / Ventum Financial Corp., 2025.
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