TORONTO - Canada’s main stock index saw notable gains on Wednesday, March 12, 2025, closing up 175.14 points at 24,423.34, as U.S. markets displayed mixed results amid rising tariff tensions.
This fluctuation follows the official implementation of 25 percent tariffs on U.S. imports of steel and aluminum, prompting Canada's retaliatory strategy. The Bank of Canada also made headlines by cutting its key lending rate by a quarter-point, bringing it down to 2.75 percent.
“The back and forth on tariffs continues,” stated Anish Chopra, managing director with Portfolio Management Corp. He referred to the markets' unpredictable movements over the past week and a half, as daily and even hourly updates on the U.S.-Canada trade conflict leave investors on edge.
The Canadian government's announcement of additional retaliatory tariffs came on the same day the U.S. tariffs took effect, indicating the heated atmosphere around trade relations. This second round of tariffs aims to protect Canadian industries impacted by the sudden shift in trade policies.
Bank of Canada governor Tiff Macklem highlighted the toll these tariffs are taking on both business and consumer confidence. “The uncertainty caused by tariffs has shaken business and consumer confidence, and they could cause severe economic damage the longer they are in place,” Macklem said. “The uncertainty alone is already causing harm.”
Meanwhile, across the border, the markets reacted as follows: the Dow Jones industrial average dropped 82.55 points to 41,350.93, reflecting investor hesitance. Conversely, the S&P 500 saw gains, rising 27.23 points to 5,599.30, and the Nasdaq composite climbed 212.35 points, closing at 17,648.45.
The latest data on U.S. inflation, released on the same day, showed prices increased at a slower pace than analysts had anticipated. “That’s good news,” noted Chopra. This slowdown provides the Federal Reserve some flexibility for upcoming interest rate decisions. While the Fed does not plan to decrease its key rate during its next meeting, expectations are rising for future cuts amid tariff uncertainties.
Chopra expressed caution about the inflation data, reminding observers it was calculated before the U.S. enacted tariffs on Canadian goods. “I think it will take some time for this to clear up, to see what the trend is,” he commented, implying the situation is still fluid. “There’s just a lot of moving parts.”
The Canadian dollar strengthened slightly by trading at 69.49 cents US compared to 69.20 cents US just one day prior. Within commodities, the April crude oil contract saw increases, rising by US$1.46 to hit US$67.68 per barrel. Meanwhile, the April natural gas contract declined by 37 cents, settling at US$4.08 per mmBTU.
Gold also saw positive movement, with the April contract climbing US$25.90 to reach US$2,946.80 per ounce. Copper markets also reflected optimism, with the May contract up eight cents per pound to US$4.82.
The current backdrop of trade wars coupled with monetary policy adjustments indicates potentially rocky seas both for U.S. and Canadian markets. With these changes now set forth, both consumers and businesses will be gauging the impact of tariffs as the situation continues to evolve.
This report is based on information from The Canadian Press and the Associated Press, highlighting significant economic indicators and market reactions as of March 12, 2025.