TORONTO — A sharp increase in tariffs the U.S. put on Canadian steel and aluminum Wednesday weighed on markets but investors were relieved Donald Trump’s latest attack didn’t exact the same damage as prior rounds.
“If we reflect back obviously to April and the extreme volatility we had at that time, even tariff mentions in the media were causing market swings like three to four per cent a day,” said Brianne Gardner, senior wealth manager with Velocity Investment Partners at Raymond James.
“We're not seeing as high volatility as we did see. I think it's a little bit more muted now.”
The S&P/TSX composite index closed down 97.64 points at 26,329.00 on Wednesday.
In New York, the Dow Jones industrial average was down 91.90 points at 42,427.74. The S&P 500 index was up 0.44 points at 5,970.81, while the Nasdaq composite was up 61.53 points at 19,460.49.
The Canadian dollar traded for 73.12 cents US compared with 72.87 cents US on Tuesday.
Gardner saw the numbers as being a sign that the market is getting used to Trump’s tariff whims but not discounting the troubles they can cause.
She thought investors were likely thinking of TACO — an acronym that stands for “Trump Always Chickens Out,” which is meant to describe the U.S. president’s penchant for flip-flopping on tariffs — when the U.S. doubled Canadian steel and aluminum tariffs to 50 per cent at midnight.
But while Donald Trump has backed down on tariffs several times, she worries that won’t be the case this time because he’s heard of TACO and isn’t happy about it.
“I think that actually might ignite him to become a little hot and heavy,” she said.
“I feel like anyone who is a little power hungry hearing something like that about them, you know, might not love that, so we will watch that closely to see if he is going to be a little bit more aggressive, at least in the short term.”
While most sectors wind up impacted by the tariffs, she pointed out that energy took much of the hit Wednesday.
The July crude oil contract was down 56 cents US at US$62.85 per barrel and the July natural gas contract was essentially unchanged at US$3.72 per mmBTU.
Away from tariffs, investors also had their eye on several rounds of economic news.
In Canada, the most important was a decision from Bank of Canada governor Tiff Macklem to hold the country’s key rate at 2.75 per cent for the second time in a row.
Macklem’s hold signalled caution but was widely expected given recent manufacturing and productivity data, Gardner said.
“That hinted at a little bit of a softer patch for the Canadian economy, so I think that’s something that we're starting to see and hear flow through now,” she said.
In the U.S., markets were impacted by the bond market, where Treasury yields fell following a pair of weaker-than-expected reports on the economy. One said that activity contracted for U.S. retailers, finance companies and other businesses in the services industries last month, when economists were expecting to see growth. Businesses told the Institute for Supply Management in its survey that all the uncertainty created by tariffs is making it difficult for them to forecast and plan.
A second report suggested U.S. employers outside of the government hired far fewer workers last month than economists expected. The report from ADP said private employers hired just 37,000 more workers than they fired, down from the prior month’s 60,000.
The August gold contract was up US$22.10 at US$3,399.20 an ounce and the July copper contract was up six cents US at US$4.89 a pound.
— with files from The Associated Press
This report by The Canadian Press was first published June 4, 2025.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Tara Deschamps, The Canadian Press
