Year in Review: Tariffs, Tech, Rates and More

As the saying goes, there are two guarantees in life, death and taxes, but we may add one more to the list: that markets are never dull, at least within a given year. By that measure, 2025 is sure to be memorable. Global trade shifted with the stroke of a pen, artificial intelligence sent investors on a thrill ride and gold quietly ended up being the year’s top-performing asset class (so far, at least).

Here's a look back at some of the major stories of 2025, plus some lessons investors can take into the New Year.

Tariffs take centre stage
At the beginning of the year, most people had no idea how tariffs worked; now we’re all trade policy experts. It all started when U.S. President Donald Trump took office in January, but things really came to a head on April 2 following Trump’s “Liberation Day” event,¹ when he announced sweeping tariffs on about 90 countries. Markets took a nosedive,² and economists worked late into the night to figure out how tariffs would impact the flow of goods and the prices of consumer products. Since then, tariffs have come and gone – and come again (and gone again in some cases). Canada remains without a trade deal though, which has fuelled continuing economic uncertainty.

Lessons learned: One lesson to take away from the tariff induced market shock: do not panic when markets tumble. Between April 2 and April 8, the S&P 500 fell by more than 12 per cent,³ while the S&P/TSX Composite Index dropped by about 11 per cent.⁴ Since then, the indexes have climbed by 34 per cent and 35 per cent, respectively (as of November 24). When markets are uncertain, it can be helpful to focus on long-term goals, instead of reacting to short-term news.

AI goes big
Another major story was AI, which, you could argue, has come into its own this year. Over the past twelve months, many major technology companies have announced significant investments in AI-related infrastructure,⁵ and their share prices have climbed.⁶ People have moved beyond discussing the features of ChatGPT, Gemini and other AI programs, and are now considering the potential implications of the technology on society more broadly.⁷ While the long-term potential of AI is still unclear for many, companies invested an estimated US$580 billion in data centres in 2025 alone – US$40 billion more than what’s being spent on the global oil supply.⁸

Lesson learned: There is some healthy debate around whether there’s an AI bubble or not (we suggest listening to this RBC podcast to learn more) – and if you think valuations in the tech sector have been stretched, you might want to consider investing beyond the big names that you hear about all the time. Businesses such as utilities,⁹ energy producers¹⁰ and infrastructure companies¹¹ could benefit from increased adoption of AI, as could the mining companies that produce the raw materials needed to build that infrastructure. You could also explore different industries that are using AI to boost their workflows, such as healthcare and finance. It’s likely a good idea to do some due diligence, though, as AI is evolving fairly quickly.

Gold takes the top spot
It may not quite be the gold rush of the 1840s, but many investors have sought out the yellow metal this year. In fact, at the time of writing, gold is one of the best-performing asset classes of 2025, rising by 57 per cent¹² – far higher than the S&P 500’s 14 per cent year-to-date return. Why? Typically, when there’s some economic uncertainty, which there has been a lot of this year, people invest in the commodity because it’s seen as a safe-haven asset. If the economy collapses, you can still buy goods with gold. It’s also considered a store of value, meaning that it potentially retains its value better than cash. That, coupled with a rising U.S. debt, shifting tariff policies and geopolitical tensions, has caused more people to look at gold as an alternative to the U.S. dollar. (Learn more in our recent story on gold.)

Lesson learned: The rise of interest in gold could be a reminder about diversification. Owning a mix of asset classes, such as stocks, bonds and gold, could help you take advantage of different market trends within your portfolio. If stocks fall and gold rises, the combination could potentially help offset losses. If everything goes up, you could get a boost from owning an outperforming asset class.

Interest rates drop further
The Bank of Canada (BoC) may have started reducing interest rates in 2024,¹³ but we saw several more slashes this year, with the overnight rate moving from 3 per cent in January to 2.25 per cent by October. And, after watching the other major central banks cut rates all year, the Federal Reserve got in on the act in September. The BoC has signalled that the tightening cycle could be over,¹⁴ provided there are no more economic surprises, while some economists think the Fed could cut a little bit further.¹⁵ In any case, markets have generally breathed a sigh of relief, with lower borrowing costs helping to improve housing affordability and corporate balance sheets. While it’s unlikely rates will return to the low levels of the mid-2010s, lower rates have impacted for both equities and bonds.

Lesson learned: You might want to consider playing the long game. There will likely be moments that will test your fortitude as an investor, but over time headwinds can quietly shift to tailwinds. Trying to guess which way markets will go is next to impossible. Instead of trying to predict central bank moves, you could build a diversified portfolio able to handle both rising and falling rate environments.