Investors will be rocked by more market volatility if trade tensions continue to simmer and tariffs rise substantially in the year ahead, according to the head of the Ontario Teachers’ Pension Plan. 

“Over the last year, year-and-a-half, we witnessed liquidity being drawn out of system, rising interest rates, and then a tax put on many countries through the form of tariffs,” Ron Mock said in an interview Tuesday with BNN Bloomberg’s Jon Erlichman and Amber Kanwar.

“We don’t think there may be more to the downside, but it is really going to be dependent on lot of trade tariff talks going forward. If we head in the wrong direction and we have substantial moves – increases in tariffs – that will not be a pretty scenario to work through.”

Mock, whose pension fund manages more than $193 billion in assets and represents about 323,000 working and retired teachers, said more volatility lies ahead if U.S. President Donald Trump and China President Xi Jinping are unable to strike a trade deal by March 1, 2019. The two countries set the deadline at the G20 summit in Argentina, agreeing to a 90-day standstill to give themselves time to reach a longer-term agreement before additional tariffs are implemented. 

“As we get closer and closer to that [March] deadline and a resolution is not near and we can’t see it, and there’s lot of drama heading into it, you’ll continue to see volatility around this,” Mock said, while also pointing to trade tensions between the U.S. and Europe and the fate of the new NAFTA.

“The trade story is one to keep a real eye on, because that’s where politics and egos and all sorts of things can come into play … These are critically important issues to keep an eye on.” 

Mock added that Bank of Canada Governor Stephen Poloz’s decision to hold interest rates earlier this month is a sign of “some moderation.”

“I think that moderation is appropriate, quite frankly,” Mock said. “This onward, upward march of rising interest rates to get them up to … what they’re calling ‘long term normal,’ at this point they’ve got to stop because we are seeing global growth slow down.”