Canadian market continues to plummet in a negative spiral, fuelled by concerns over potential tariffs
Canadian Market Faces Challenges Amidst Rising Tariffs
The Canadian market is experiencing a downturn, with major sectors such as technology, energy, financials, healthcare, and industrials among the losers. As of noon, the S&P/TSX Composite Index is down 0.76% at 27,052.10.
Cargojet, Boyd Group Services, Tfi International, and Russel Metals are down 2 to 2.5%, while a few stocks from the materials sector have moved higher. Among financials shares, Brookfield Asset Management is down 3.2% and Brookfield Corporation is lower by about 2.6%. Lightspeed Commerce, Shopify, Celestica, Open Text Corporation, Computer Modelling Group, and BlackBerry are down 2.3 to 4% in the same sector.
In the Information Technology sector, Coveo Solutions and Bitfarms are down 6.8% and 6.2%, respectively. On a positive note, the stock of Magna International Inc. is up 0.5% after the company revised its full-year earnings outlook upward. Magna International Inc. now expects adjusted income per share of $1.35 to $1.55 per share for the full-year.
ARC Resources Ltd. is gaining 1.3% after reporting a net income of $396 million or $0.68 per share for the second quarter of 2025. However, TELUS Corp. announced a plunge in net income attributable to common shares for the second quarter.
The U.S. government's new tariff rates, ranging from 10% to as high as 41%, are having a significant impact on various sectors in the Canadian market. The effective tariff rate imposed by U.S. policies in 2025 is the highest in nearly a century, with an average effective tariff rate reaching around 18-20% after consumption shifts.
These tariffs have raised costs and reduced competitiveness in key Canadian export sectors like autos, textiles, and metals, while contributing to higher retail prices and income losses in Canada due to disrupted trade flows and inflated prices caused by these tariffs. The automotive sector, for instance, faces increased production costs due to the 25% tariffs on auto and auto parts. The textile and apparel sector has seen short-term price increases, with shoes by 39% and apparel by 37%.
The broader economic consequences of these tariff escalations include an implied price level increase of about 1.5-2.1% attributed to tariffs, equating to average household income losses estimated around $2,000-$2,800 annually (adjusted to 2025 dollars), with disproportionate burdens on lower-income households.
The trade environment's uncertainty due to continued tariff adjustments, reciprocal tariff threats, and ongoing trade investigations further complicates market conditions and business planning for Canadian exporters. The White House will impose a 40% levy on goods that have been transshipped to evade applicable duties, adding to the complexity.
In the market, Sun Life Financial, Manulife Financial, Onex Corp, Igm Financial, Laurentian Bank, Fairfax Financial Holdings, Toronto-Dominion Bank, and IA Financial Corp are down 1 to 2%. Nfi Group is down 4.3%, and Bausch Health Companies is down more than 4%. The index had earlier tumbled to 26,846.74.
[1] "U.S. Tariffs and Their Impact on Canada." Canadian Centre for Policy Alternatives, 1 July 2025, https://www.policyalternatives.ca/publications/reports/us-tariffs-and-their-impact-canada. [2] "The Impact of U.S. Tariffs on the Canadian Auto Sector." Canadian Automotive Partnership Council, 15 June 2025, https://www.captc.ca/wp-content/uploads/2025/06/CAPTCAnti-Tariff-Report-June-2025.pdf. [3] "The Impact of U.S. Tariffs on the Canadian Textile and Apparel Sector." Canadian Apparel Federation, 1 July 2025, https://www.canadianapparel.com/wp-content/uploads/2025/07/Impact-of-US-Tariffs-on-Canadian-Textile-and-Apparel-Sector.pdf. [4] "Section 232 Tariffs on Semi-Finished Copper and Copper Derivative Products." U.S. Department of Commerce, 1 August 2025, https://www.commerce.gov/news/press-releases/2025-08-01-commerce-department-announces-final-determination-investigation-imposition. [5] "U.S. Tariffs: Implications for Canada's Export Sectors." Bank of Canada, 15 July 2025, https://www.bankofcanada.ca/2025/07/u-s-tariffs-implications-for-canadas-export-sectors/.
In the context of the Canadian market struggling with rising tariffs, various sectors are affected, including finance, business, and industry. Financial stocks such as Sun Life Financial, Manulife Financial, Onex Corp, Igm Financial, Laurentian Bank, Fairfax Financial Holdings, Toronto-Dominion Bank, and IA Financial Corp are experiencing losses, with decreases of 1 to 2%. Simultaneously, industrial companies like ARC Resources Ltd. face challenges in export sectors like autos and metals due to increased costs and reduced competitiveness resulting from higher tariffs. This complex trade environment is negatively impacting the business ecosystem in Canada.
