Markets, loonie take nosedive on Trump tariffs as oil holds steady

Canadian stock markets took a tumble on Monday, the first full day of trading since US president Donald Trump announced punitive tariffs on all Canadian goods — including energy — on Saturday and sparking a round of panic selling.

The Toronto Stock Exchange opened about 600 points lower before recovering initial losses. By noon Eastern time, it was off about 166 points or 1%.

Likewise, the Canadian dollar plummeted to its lowest level in more than 20 years, to 68.20 cents US compared with 69.04 cents on Friday. That was the lowest since 2020.

On the bright side, other major currencies — including the Euro and the Australian dollar were down by similar amounts to the Greenback in percentage terms. That’s because America’s other trading partners, including Germany and Japan, have expressed fears that they are next in line.

Trump all but said as much on the weekend, announcing plans to impose tariffs on computer chips, pharmaceuticals, steel and aluminium, among others.

After China, Germany is the world’s third largest economy while Japan is fourth.

Trump also indicated that he would be announcing tariffs against the European Union in short order. In response, the EU vowed to retaliate.

“The EU firmly believes that low tariffs foster growth and economic stability within a strong, rules-based trading system. However, the EU will respond firmly to any trading partner that unfairly or arbitrarily imposes tariffs on EU goods," a spokesman said.

But investors were banking on a relatively quick resolution, especially in the energy sector where Trump imposed reduced tastes or 10% on oil, natural gas and electricity. New York-based Goldman Sachs said in a research note that it expects the tariff war to end when Midwest motorists in key swing states feel the pinch of higher gasoline prices.

“Canadian oil tariffs would risk unpopular, if temporary, gasoline price increases in the US Midwest,” Goldman Sachs analysts wrote.

Scotiabank went as far as to urge its clients to take advantage of the stock market dip to load up on discounted names like Calgary-based Cenovus Energy, Athabasca Oil Corp. and MEG Energy.

Although it expects a 10% correction in share prices, it said producers would look to maximize exports to non-US markets through the recently expanded Trans Mountain pipeline, and re-exports from the US Gulf Coast.

“We do not expect tariffs to last long, and view share price weakness as a buying opportunity.”

Meanwhile, the CEO of one of Canada’s largest oil sands producers, Imperial Oil — 70% owned by ExxonMobil — urged the US government to reconsider its trade policies.

“Any tariffs will result in negative impacts broadly to the economy and customers," chief executive Brad Corson told investors on a conference call to announce fourth quarter results on Friday.

“I, along with many others, have spent a lot of time educating on both sides of the border around kind of the unique and integral energy system that exists, and how that is mutually beneficial to both countries.”

Oil prices were steady on Monday, up 13 cents to USD$72.66 per barrel. European Brent was down three cents, to $75.64.