Canadian Stocks Advance Even As Trade War With U.S. Escalates

(RTTNews) - Adding to two days of gains, Canadian stocks edged higher on Tuesday as investors continued to watch the developments in the Canada-U.S. trade war while Canada announced retaliatory duties on the U.S. imports amounting to nearly $20 billion against the U.S. levies of 50%.

After opening lower than yesterday's close, today the benchmark S&P/TSX Composite Index gained ground to trade positive throughout the rest of the session before settling at 36,957.63, up by 243.51 points (or 0.66%).

Notably, the index hit a new record intraday high of 36,991.67 later in the session before losing momentum.

Five of the 11 sectors posted gains today, with the financials sector leading the pack.

The previously strained Canada-U.S. trade relations turned further sour after Canada announced retaliatory tariffs on U.S. imports as a counter-measure against U.S. tariffs.

Last month, U.S. President Donald Trump accused Canada of showing discriminatory treatment against U.S.-made automobiles, liquors, and dairy products, and announced nearly 50% tariffs on a long-list of Canadian exports to the U.S.

A team of negotiators headed by Canada-U.S. Trade Minister Dominic LeBlanc discussed extensively with the U.S. team, headed by Jamieson Greer in Washington, D.C. for weeks.

However, hours after the deadline for the taxes to kick-in expired last Friday, both teams announced that no agreement was reached, leaving Canadian exports worth $20 billion to the U.S. to suffer the 50% taxes.

Both sides traded accusations on each other as the cause for the collapse of talks.

Yesterday, once again accusing Canada of ripping off U.S. farmers, Trump announced an increase in the tariffs on all sizes of cars and trucks, automotive parts, and steel exported from Canada to the U.S. to 50%, with the levies set to take effect from January 1, 2027.

Responding to Trump's taxes, Canada announced dollar-for-dollar counter-tariffs on nearly $27.60 billion worth of U.S. imports to Canada. These new counter-levies will have a sliding scale of 15%, 25%, and 50% and are set to go into force on September 8.

These include products made of iron or steel, nuclear reactors, boilers, raw iron and steel, paper, aluminum products, electrical machinery, and so on.

In addition, Prime Minister Carney's government offered around $7.50 billion worth of support for workers and businesses.

Widening the gap created in the Canada-U.S. relations, today Trump stated that the U.S. may change the name of "Lake Ontario" to "Lake America."

Speaking on the economic challenges ahead, Canada's Finance Minister Francois-Philippe Champagne stated that Canadians will meet the moment together and Industry Minister Melanie Joly urged Canadians to buy Canadian-made products.

Economists are assessing the long-term impact of the tariffs and counter-tariffs. The Canadian economy is roughly one-twelfth the size of the U.S. economy.

Of note, Trump's tariffs have always excluded oil, natural gas, fertilizer potash, and many other minerals from Canada.

Data released by Statistics Canada today revealed that Canada's wholesale trade decreased 0.60% month-over-month in July, following a 2.80% increase in the previous month, marking the first decline since January.

To force Iran to come to the U.S. terms, yesterday, U.S. Treasury Secretary Scott Bessent unveiled "Operation Economic Outcast" intended to cut off all the financial channels supporting Iran.

The Office of Foreign Assets Control sanctioned nearly 60 entities, individuals, and vessels that supported Iranian operations and suspended several licenses that authorized remittance payments to Iran.

These sanctions targeted any person that operates in the Iranian economy in sectors including digital assets, technology, gold, aviation, and shipping.

The New York Times reported that the U.S. is preparing to send diplomats back to embassies in the Middle East.

Analysts are of the view that the U.S. administration is not expecting a full-scale war in the gulf in the near-future.

The consequential slump in crude oil supported gold prices. The gold-linked materials sector pushed the index on the upside.

Major sectors that gained in today's trading were Financials (1.79%), Materials (1.54%), IT (1.24%), Healthcare (0.77%), and Utilities (0.09%).

Among the individual stocks, Bank of Nova Scotia (7.02%), Trisura Group Ltd (4.10%), Canadian Imperial Bank of Commerce (2.80%), Southern Cross Gold Consolidated Ltd (6.48%), Seabridge Gold Inc (5.54%), and Ero Copper Corp (4.55%) were the prominent gainers.

Major sectors that lost in today's trading were Energy (2.59%), Consumer Discretionary (1.53%), Industrials (0.87%), Real Estate (0.85%), Consumer Staples (0.60%), and Communication Services (0.29%).

Among the individual stocks, Imperial Oil (4.20%), Cenovus Energy Inc (3.97%), Strathcona Resources Ltd (3.36%), Suncor Energy Inc (3.01%), Brp Inc (3.58%), and Magna International Inc (2.71%) were the notable losers.