Canada and U.S. stock markets fall for a second day after trade war launched

By Canadian Press on March 4, 2025.

TORONTO — North American stock markets fell for a second day as the U.S. imposed broad tariffs on imports from Canada and Mexico, triggering a continental trade war.

The S&P/TSX composite index was down 380.80 points at 24,620.77 in early-afternoon trading, after U.S. President Donald Trump’s executive order implementing the tariffs took effect just after midnight.

“Markets are getting crushed today,” said Colin Cieszynski, portfolio manager and chief market strategist at SIA Wealth Management.

“It’s not just Canada; it’s U.S. markets are getting hammered, European markets are getting hammered, even the Asia Pacific markets were down.”

U.S. markets were down in early-afternoon trading, though they had recovered somewhat from deeper losses earlier in the day.

The Dow Jones industrial average was down 555.51 points at 42,635.73. The S&P 500 index was down 53.37 points at 5,796.35, while the Nasdaq composite was down 75.84 points at 18,274.35.

Trump enacted 25 per cent tariffs on Canadian and Mexican goods, with a 10 per cent levy on energy. The move came after a one-month pause on the tariffs, as Trump dashed hopes Monday that Canada might be able to negotiate its way out of a trade war.

Investors hate tariffs, said Cieszynski, because they “(pour) sand into the gears of the global economy.”

With Canada announcing its retaliatory tariffs as expected, “This is just getting started,” he said. “It’s still closer to the beginning than it is to the end.”

Prime Minister Justin Trudeau said Canada “will not back down” as he announced Canada’s retaliation. The plan includes 25 per cent tariffs on a swath of American products including food, alcohol, clothing, cosmetics, furniture, lumber and more.

The market rout could play out over the next few days, said Cieszynski, “and then at some point, things stabilize and people look around to see what the lay of the land is.”

“But the question then is, what’s the outlook going forward? How much upheaval could this have for the economy and for companies?”

At least in the short term, Cieszynski said investors clearly expect the trade war to have a significant slowing effect on not just the North American economy, but the global economy.

“Canada has been hit with its largest trade shock in nearly 100 years,” wrote RBC economists Frances Donald and Cynthia Leach in a report Tuesday.

The ultimate economic impact of the tariffs will depend on how long they are in place, they wrote. However, the threat of tariffs has already had an effect, with U.S. importers stockpiling ahead of the deadline and uncertainty measures around all-time highs.

For Canada, the main concerns are around economic growth, while the U.S. is expected to struggle with inflation, wrote Donald and Leach.

The Canadian dollar traded for 68.86 cents US compared with 69.31 cents US on Monday.

The April crude oil contract was down 27 cents US at US$68.10 per barrel and the April natural gas contract was up 28 cents at US$4.40 per mmBTU.

The April gold contract was up US$21.30 at US$2,922.40 an ounce and the May copper contract was down five cents at US$4.57 a pound.

This report by The Canadian Press was first published March 4, 2025.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Rosa Saba, The Canadian Press