The TMX building in Toronto is shown on Wednesday, November 1, 2023. (Chris Young/The Canadian Press)
Canada’s main stock index climbed over 100 points on Tuesday, while U.S. markets showed mixed results ahead of a crucial tariff decision by President Donald Trump. The uncertainty kept investors on edge, causing fluctuations throughout the day.
Anish Chopra, managing director at Portfolio Management Corp., described the market’s movements as a waiting game, reacting to every bit of news about the tariffs set to take effect on April 2. The tariffs, initially postponed for a month, target goods from Canada and Mexico. However, a White House official revealed that a final decision on whether to reinstate them is still pending.
Meanwhile, Democrats in the U.S. Senate are pushing to block these tariffs, arguing that Trump’s justification—concerns over fentanyl coming from Canada—is baseless. They believe the president is manufacturing an emergency to impose the duties.
Adding to the tension, Trump plans to introduce his vision for "reciprocal tariffs" on Wednesday, a move he refers to as "Liberation Day." This would involve increasing U.S. tariffs to match what other countries charge for American imports. His newly announced auto tariffs are also expected to be enforced starting April 3.
By market close, the S&P/TSX composite index had gained 115.78 points, reaching 25,033.28. In the U.S., the Dow Jones industrial average dipped slightly by 11.80 points to 41,989.96, while the S&P 500 rose 21.22 points to 5,633.07. The Nasdaq composite saw a significant boost, climbing 150.60 points to 17,449.89.
Market analysts remain concerned about the broader impact of these tariffs. Chopra highlighted that sudden policy changes create instability, and investors dislike uncertainty. Over the past month, Trump has imposed, delayed, and announced various tariffs, leaving businesses and traders scrambling to adjust.
A major concern is that tariffs could increase costs for both consumers and businesses at a time when the U.S. Federal Reserve has been trying to stabilize inflation. Chopra emphasized that tariffs ultimately get passed down the supply chain, meaning someone will bear the financial burden.
In Canada, economic growth may also suffer, as Ottawa’s expected counter-tariffs could raise prices across various industries.
On the currency front, the Canadian dollar edged up slightly to 69.70 cents US from 69.56 cents US on Monday. Commodity prices saw minor shifts, with crude oil dipping 28 cents to US$71.20 per barrel and natural gas falling 17 cents to US$3.95 per MMBtu. Gold prices declined by US$4.30 to US$3,146 per ounce, while copper rose a penny to US$5.04 per pound.
With only a day left before the tariff deadline, investors are bracing for potential policy changes. The uncertainty continues to loom large, making market reactions unpredictable.
