04:17 PM EDT, 04/10/2025 (MT Newswires) -- The Toronto Stock Exchange on shed more that than half of the 1,200 points gained a day earlier as trade tensions between the United States and China escalate, keeping fears around a global recession alive, although one economist sees Canada potentially to actually gaining more of the U.S. import market.

The S&P/TSX Composite Index closed down 712.16 points to close out the day at 23,014.87. Among sectors, Energy, Information Technology and Base Metals were the biggest decliners, down 6.59%, 6.12% and 6.32%.

Reflecting the chaos around markets, U.S. President Donald Trump conceded today that there may be "transition problems" with his trade policies. This came as the White House clarified the U.S. tariff on all Chinese goods is at least 145%, higher than the 125% previously thought. It followed Trump's move on Wednesday to pause some tariffs, with Canadian government officials among those left having to reach out to the U.S. administration to then ask if that order covered covered them or not.

China, meanwhile, imposed its own tariffs of 84% on U.S. imports and is reaching out to other countries around the world to form trade agreements and create a united trading front against the United States.

According to one Macquarie economist, there is a substantial risk for the United States of stagflation, a combination of slow growth, high unemployment, and rising prices in its economy, which could eventually lead to Canada gaining a larger slice of the U.S. market.

David Doyle, head of economics at Macquarie, noted the Trump administration has announced a 90-day pause on reciprocal tariffs, reducing the rate on imports for all trade partners to 10% except for China. 25% tariffs remain on steel & aluminum, autos, and non-USMCA compliant imports from Canada and Mexico. This is poised to occur even as China's rate jumps to 125%, or 145% on recent reports. "Even with this policy shift holding tariffs at lower levels, there remains substantial risks of stagflation for the US economy," he said.

Doyle said while much remains uncertain on trade policy ahead, the current tariff rates are "roughly consistent" with what President Trump outlined during his campaign. This, he added, suggests that if the current state of tariffs hold, it will likely mean significant trade diversion ahead. In 2024, Doyle noted, the U.S. imported near $440 billion of goods from China. The elevated tariff rate of 125% (or 145%) is likely to "make much, (if not all) of this amount" uneconomic. "As a result," Doyle said, "the US is likely to either increase domestic production of such goods, or even more likely, increase imports from other trade partners. This becomes more likely the longer the tariff asymmetry remains in place."

Macquarie's analysis, Doyle said, suggests Canada, Mexico, the E.U., Vietnam and Taiwan have the greatest potential to gain U.S. import share. The economic impact could prove most significant for several emerging markets including Vietnam, Mexico, Thailand, Taiwan, and Malaysia, he added.

Of commodities, West Texas Intermediate crude oil closed lower on Thursday following a day-prior rise of nearly 5% after Donald Trump partially backed off his blanket tariff threats, but hiked levies on China as the world's two largest economies descend into a trade war. WTI crude oil for May delivery closed down $2.28 to US$60.07 per barrel, while June Brent crude was last seen down US$2.40 to US$63.08.

Gold traded at a record high late afternoon on Thursday as U.S. stock markets weakened following a day-prior surge. Gold for June delivery was last seen up $112.60 to US$3,192.00 per ounce, topping the April 2 record close of US$3,166.20.