It’s probably an understatement to say that most Canadians are not fans of Donald Trump. Trump’s tariffs—against steel and aluminum, against automobiles and as of April 2, on just about all Canadian imports—are a big part of the reason. But so is the apparent disrespect Trump has shown to a long-standing friend and ally, including his desire to see Canada become the 51st state and his claim that the world’s longest undefended border is just an “artificial line.” Even if he has been joking, most Canadians (to paraphrase a line often attributed to their onetime sovereign) are not amused.
Count Jim Hewitt among them. Hewitt’s family business was for 65 years Eastern Canada’s largest Caterpillar equipment dealer, until its sale in 2017 to Toromont for more than a billion dollars. While he has had deep connections to the U.S. all his life, Hewitt makes no bones about how his feeling have changed. He is also putting his money where his mouth is.
Earlier this year, as Trump continued his rhetoric about making Canada the 51st state—and weeks before the April 2 “reciprocal” tariff announcement that has upended global financial markets—Hewitt and his family decided to pare back their U.S. investments and their use of U.S. money managers across portfolios in their personal holdings, in the private equity firm the Hewitt Group, and in the Hewitt Foundation, which supports health and educational causes with a strong focus on Eastern Canada.
Hewitt was not alone among global investors in reducing exposure to the U.S. Between mid-February and mid-March, European investors drew down $4.4 billion from U.S. equity exchange-traded funds, and that does not happen very often. Canadian flows to U.S. stock ETFs fell by 70 per cent in February, then declined again in March.
For the Hewitt family, the cutback, at just five per cent of its U.S. assets, may seem largely symbolic. But as Jim Hewitt made clear in a mid-March conversation with Canadian Family Offices, it may have been just the beginning—and he would like to see other wealthy Canadians follow suit.
How have the recent moves from the Trump administration and the President’s talk about annexing Canada affected your attitudes towards the United States?
Hewitt: Well, there’s absolutely no way that I have two seconds of interest in becoming an American.
All my life, my family has had property in the Thousand Islands area, where the border between Canada and the United States kind of meanders down the centre of the St. Lawrence River. I spent all my summers in that context, and a lot of my closest friends were Americans. We grew up together. It upsets me greatly that those relationships could be negatively impacted by the actions and behaviour of the current administration in the U.S.
But now, I say to people that I used to have a great deal of respect and admiration for the United States of America and for Americans in general—and the operative phrase there is ‘used to.’ As we go forward, my respect for Americans is going to be on a much more selective basis.
Unfortunately, Donald Trump has created a shift that is probably going to last for your lifetime and mine. I don’t think there’s any question of going back to business as usual.
Tell me about your family’s exposure to the U.S. from an investment perspective.
Hewitt: When we sold the business in 2017, we did a fair amount of strategic planning. One of the big questions was, how do we do the investment management? After an extensive search, it came down to working with [a U.S.-based portfolio manager], who were the primary architects of our investment policies and handle finding our money managers. Given their location, it automatically led to portfolios that were pretty heavily focused on U.S. investments. That might not have been my first choice, because what we’re doing with our foundation is really focusing on Eastern Canada, where our business operated. The investment policies for our foundation and the Hewitt Group and our personal holdings are all slightly different, but in general they are similar and have similar exposures.
How did you reach the decision to pare back your U.S. exposure?
Hewitt: In late February, based on Donald Trump’s repeated belittling of our country and threats to Canada’s sovereignty, as well as his tariff threats, we basically decided to do a five per cent trim across the board of the passive money managers we use in the U.S. From my personal point of view, five per cent is a little timid. But the primary objective is to bring these funds back to Canada and support Canadian investment and Canadian business opportunities.
We need to be supporting Canadian business and the Canadian economy. And I guess also, when you look at what’s going on in the U.S. market, if Trump continues in the direction he’s going, it’s just going to blow up the American economy.
So, some of this move was risk mitigation, given the volatility in the U.S. market?
Hewitt: Volatility, yes, although I think ‘chaos’ is the appropriate word. There is no predictability to what tomorrow’s flavour of Kool-Aid is going to be. The thing that quite frankly blows my mind is seeing people who you would otherwise think are intelligent spouting the party line, whether they believe it or not. I think that the U.S. economy is in serious danger.
I know many other businesspeople are just afraid of being caught in Trump’s sights and becoming an object of his revenge.
Jim Hewitt
Is five per cent just the beginning? Are you prepared to go further?
Hewitt: Oh, yeah. If I could get my investment committee to agree, we would be looking to very quickly go to 25 per cent. Is that smart? I don’t know. But I voice my opinion and let the investment committee think about it.
Are you concerned about repercussions from speaking out on this issue?
Hewitt: Well, you know, I’m in the ‘fat, dumb and happy’ phase of life. I’m no longer an equipment dealer, so I don’t have to worry about what a U.S. supplier thinks about what I say. I know many other businesspeople are just afraid of being caught in Trump’s sights and becoming an object of his revenge. So, am I comfortable? Yes, I’m comfortable. I have recently cancelled plans to attend a meeting in the U.S., and I won’t be planning to go anytime in the foreseeable future.
Have you talked to any other family business leaders in Canada who are feeling the same way?
Hewitt: Well, we have, and I would say, you know, a number of them have interests in the U.S. or they have U.S. connections, so they are reluctant to take any overt steps. Given Trump’s modus operandi, I can sympathize to some degree. But at a certain point, we’re going to have to stand up and be counted. Individual actions aren’t going to have much impact, but a number of people doing the same thing will.
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