US Tariffs Enacted, Causing Decline in Canadian Stock Market on August 7
The US President, Donald Trump, has signed an executive order imposing new tariffs on 69 countries, including Canada. This move is expected to have a significant impact on the Canadian economy, particularly on Canadian stocks.
The tariffs, which are set to take effect from August 7, could increase costs for Canadian producers and potentially depress earnings for companies reliant on US trade. The higher tariff, which applies to goods not covered under preferential treatment by the USMCA, is primarily a response to national security concerns related to illicit drug flows from Canada into the US, according to the Trump administration.
The impact on Canadian stocks and the broader economy is likely negative. The tariff hike could reduce Canadian export competitiveness in the US market, leading to downward pressure on Canadian stock prices, particularly in export-heavy sectors. The increased tariffs may also provoke Canadian retaliatory measures, further escalating trade tensions.
These tariffs are part of broader US trade actions, including tariff adjustments on other countries, which together reflect a more protectionist US trade stance with potential for disrupted supply chains and market uncertainty. Canadian businesses and investors are therefore facing heightened risks from these tariffs, which could slow economic growth if sustained.
In the Canadian market analysis for the 2020 calendar year, all major sectors traded in the negative territory, posting losses ranging from 0.01% to 0.94%. The Healthcare, Consumer Staples, Energy, and IT sectors were the major sectors that lost, with losses of 1.07%, 1.15%, 1.86%, and 2.37% respectively.
Despite the negative market trends, there are some positive outliers. For instance, Mda Ltd had a significant gain of 18.38%, while Dundee Precious Metals Inc and Capstone Mining Corp also had gains of 7.05% and 5.15% respectively. However, Bausch Health Companies Inc, Vermillion Energy Inc, Bitfarms Ltd, and Coveo Solutions Inc were among the notable losers in individual stocks, with losses of 3.43%, 3.43%, 7.43%, and 7.21% respectively.
The Canada Manufacturing PMI rose to 46.1 in July, reflecting a contraction in the Canadian private-sector factory activity. This trend, coupled with the looming tariffs, raises concerns about the future of the Canadian economy.
The USMCA free trade treaty is set for re-negotiation in 2022, offering a glimmer of hope for a resolution to the trade tensions. Economists are optimistic that President Donald Trump, as a dealmaker, may keep the door open for negotiations with Canada.
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- The new tariffs imposed by Donald Trump on 69 countries, including Canada, could lead to increased costs for Canadian producers and potentially depress earnings for companies reliant on US trade, according to a financial analysis.
- The impact of these tariffs on the Canadian economy extends beyond stocks, as they could reduce Canadian export competitiveness in the US market, potentially slowing economic growth if sustained.
- In the Canadian market analysis for the 2020 calendar year, sectors like Healthcare, Consumer Staples, Energy, and IT suffered significant losses, while a few stocks, such as Mda Ltd, Dundee Precious Metals Inc, and Capstone Mining Corp, managed to gain.
- The Canada Manufacturing PMI for July reflects a contraction in the private-sector factory activity, raising concerns about the future of the Canadian economy given the looming tariffs.
- The USMCA free trade treaty is set for re-negotiation in 2022, offering a potential opportunity for resolving trade tensions and reducing the overall impact of these tariffs on personal-finance and the broader Canadian economy.
- The ongoing trade tensions, coupled with the negative market trends, emphasize the importance of education-and-self-development and careful investing strategies to navigate these uncertain times, while general-news, sports, technology, entertainment, and casino-and-gambling sectors may also be affected indirectly.
