Canadian Stocks Tumble As Retaliatory Tariffs On U.S. Takes Effect

(RTTNews) - Canadian stocks slumped on Tuesday, adding to three previous sessions of losses, as the tit-for-tat tariffs imposed on U.S. imports kicked in today, increasing concerns of a high-stakes, intense Canada-U.S. trade war while messages posted by U.S. President Donald Trump diminished expectations of a reconciliation between the two nations.

After opening lower than previous week's close, today the benchmark S&P/TSX Composite Index traded firmly negative throughout the session before settling at 36,123.05, down by 390.75 points (or 1.07%).

Of note, the Canadian market was closed on Monday on account of Labor Day Holiday.

Only two of the 11 sectors posted gains today, with the energy sector leading the pack.

After accusing Canada of extending a discriminatory treatment for U.S. imports, U.S. President Donald Trump announced 50% tariff imposition on various Canadian exports to the U.S. The levies took effect since August 22.

Despite multiple rounds of negotiations with the U.S. team of negotiators, an agreement between both the nations for a smooth bilateral trade could not be reached.

Aside from these 50% tariffs, Trump expanded the levies on automobiles and automotives from Canada to the U.S. to as high as 50%. However, these tariffs kick in only from January 1, 2027.

In retaliation, Canada's Prime Minister Mark Carney announced "dollar-for-dollar" tariffs on U.S. imports under an executive action known as an Order in Council. These duties came into effect from today.

These retaliatory tariffs on U.S. imports, imposed on a sliding scale of 15%, 25%, and 50%, will apply to nearly $20 billion American products ranging from steel to furnitures to textiles to aluminium to milk.

In a nearly 15-minute video address to the nation, Carney stated that the counter-tariffs are necessary to protect Canadian workers.

Carney stressed that moving from the U.S., which is Canada's largest trading partner, will come at a cost.

The U.S. economy is roughly 13 times larger than Canadian economy with a majority of Canadian exports flying to the U.S.

In an interview with CBC News, U.S. Trade Representative Jamieson Greer stated that the U.S. could consider imposing tit-for-tat tariffs on Canada.

On July 1, U.S. administration refused to extend the Canada-United States-Mexico Agreement on free trade in its original form.

Yesterday, Trump messaged through Truth Social that the Montreal-based Canadian aircraft builder Bombardier will not be allowed to sell in the U.S. if they do not build in the U.S.

With no new talks with the U.S. scheduled, adding to investors' concerns, Trump also posted a picture of North America which included Canada, Mexico, and Greenland laid over with the U.S. flag.

Last Friday, Statistics Canada's jobs data revealed a decline by 41,700 in August, missing expectations for a 15,000 increase and following a 75,100 gain in July, with the manufacturing sector showing an increase of 1.20%.

The unemployment rate remained unchanged from the previous month at 6.40% in August, in line with analysts' expectations.

Economists caution that the effect of the ongoing Canada-U.S. tariff war on the economy could be fully assessed only after the data releases from the coming months.

Major sectors that gained in today's trading were Energy (0.89%) and Utilities (0.75%).

Among the individual stocks, International Petroleum Corporation (4.17%), Tamarack Valley Energy (3.29%), Spartan Delta Corp (3.23%), Strathcona Resources Ltd (2.78%), and Transalta Corporation (3.38%) were the prominent gainers.

Major sectors that lost in today's trading were IT (3.12%), Consumer Discretionary (2.73%), Real Estate (1.73%), Financials (1.49%), Industrials (1.12%), and Communication Services (1.06%).

Among the individual stocks, Shopify Inc (7.84%), Kinaxis Inc (6.42%), Docebo Inc (5.64%), Constellation Software Inc (5.63%), Brp Inc (6.47%), and Gildan Activewear Inc (3.78%) were the notable losers.

Ivanhoe Mines Ltd (12.82%), Ngex Minerals Ltd (10.33%), and Ero Copper Corp (8.46%) were among the prime market-moving stocks today.