Canadian stocks tumbled Tuesday after U.S. President Trump imposed 25% tariffs on goods from the neighboring country and a lower 10% tariff on oil products.
At midday, the benchmark S&P/TSX Composite was down 499 points, or 2%, and the S&P/TSX 60 index opened down 31.4 points, or 2.1%.
Prime Minister Justin Trudeau announced that Canada would respond with 25% tariffs on C$155 billion worth of U.S. goods starting Tuesday.
Canada will impose 25% tariffs on C$30 billion worth of U.S. goods starting Tuesday, with tariffs on the remaining C$125 billion in products set to take effect in 21 days.
"Our tariffs will remain in place until the U.S. trade action is withdrawn, and should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures," Trudeau stated.
In addition to the Canada tariffs, Trump announced that 25% tariffs would go into effect Tuesday on Mexico, and an additional 10% tariff would be applied to China, bringing their rate to 20%.
Is a Canadian recession on the horizon?
BMO (TSX:BMO) Capital's Chief Economist, Douglast Porter, warned that President Trump could retaliate for Canada's retaliation and overall views that "tariffs on Canada and other countries could be around for a while, and could go potentially higher." He estimates that the tariffs will reduce Canada's real GDP growth by roughly 1.5 ppts to around 0.5% in 2025.
U.S stocks fall again
U.S. stocks fell again, extending Monday’s sharp sell-off. Shortly after noon, the Dow Jones Industrial average was down 648 points, or 1.5%, the S&P 500 was down 73 points, or 1.2%, and the tech-heavy NASDAQ was down 142 points, or 0.8%.
Crude oil falls
Oil prices fell on Tuesday as traders weighed the growing risk of a global trade war alongside expectations of higher output from major producers next month.
By 12:15 ET, U.S. crude futures (WTI) dropped 1% to US$67.71 per barrel, while Brent Oil declined 1.5% to US$70.53 per barrel, nearing three-month lows.
On Monday, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, confirmed plans to move forward with a scheduled April production increase of 138,000 barrels daily, marking the group’s first output hike since 2022.
Gold rises
Gold prices climbed on Tuesday as investor demand for the metal’s safe-haven appeal grew following the announcement of new tariffs by U.S. President Donald Trump.
By 12:15 ET, gold futures gained 0.8%, reaching US$2,924 per ounce, extending its rally for a second consecutive session.
So far this year, bullion has surged by approximately 10%, briefly hitting an all-time high of US$2,956.15 on February 24. However, analysts at UBS noted that gold lost some momentum toward the end of the month, partly due to profit-taking and well-anticipated supply challenges in the U.S. and UK.
(Frank DeMatteo also contributed to this article)
