04:30 PM EDT, 03/31/2025 (MT Newswires) -- The Toronto Stock Exchange on Monday recovered some of the ground after Friday's 400-point drop, rising ahead of the Wednesday's "Liberation Day" announcement by U.S. President Donald Trump of further tariffs on countries and products.

The S&P/TSX Composite Index closed up 158.35 points to finish at 24,917.50. The resources heavy TSX was also buoyed by higher commodity prices, with Energy, up 1.24%, and Industrials, up 1.06%, posting the biggest gains among market sectors. Base Metals and Technology, down 1.65% and 0.14% respectively, were the biggest decliners.

On tariffs, The Wall Street Journal today reported that most trading partners will be facing tariff rates of up to 20% this week. It noted the administration has already imposed 25% steel and aluminum tariffs, an additional 20% tariff on China, 25% tariffs on most goods from Canada and Mexico that aren't covered by the USMCA, and a 25% tariff on all imported cars starting April 3.

National Bank said global equity markets are now reacting, after initially dismissing Washington's "aggressive" protectionist rhetoric and the looming threat of sweeping tariffs. The bank noted the import taxes already in place have driven the effective U.S. tariff rate to approximately 7%, the highest since the end of World War II. If Washington proceeds with a second wave of levies on foreign imports, as recently announced, the effective tariff rate could jump to 15%, a level not seen since the 1930s.

While Washington argues that the economy is well positioned to weather a trade war, citing that exports make up only 11% of GDP, National Bank said the stock market may tell a different story. It noted foreign sales account for a substantial 41% of total revenues among S&P 500 companies. Among all industries, the bank noted, the Information Technology sector is the most exposed to a potential tariff war and retaliatory measures from foreign trading partners, with nearly 60% of its sales generated overseas.

On Canada, National Bank noted that after initially withstanding the negative impact of U.S. tariff threats on the Canadian economy, the S&P/TSX had now relinquished nearly all of its 2025 gains. As of writing, the Canadian benchmark was up just 0.1% since the start of the year, with only three sectors, Materials, Energy, and Utilities, remaining in positive territory.

National Bank said this month it is further reinforcing its defensive asset allocation by increasing its cash holdings and reducing its U.S. equity exposure to five percentage points below benchmark. The stagflationary tilt of current U.S. economic policy, marked by aggressive protectionism, fiscal laxity, and restrictive immigration measures, poses "meaningful risks" to global supply chains and corporate profitability, the bank added.

CIBC economists Benjamin Tal and Katherine Judge on Monday said signs of fragility in growth indictors, and upward pressure on inflation, are behind their assessment that time is not on the President Trump's's side, with every day that passes revealing more wounds in the US economy and rising inflation fears. The administration will therefore have to stabilize the situation sooner rather than later, including a move to a less protectionist stance, they added.

"Our working assumption is that tariffs are here to stay but we see the effective tariff rate on Canadian goods rising from around 2.5% to 10-20% in the coming few months before falling to 5%-10% in 2026 and probably staying at that level for the foreseeable future. Note that we are talking about the weighted average tariff rate on Canada, so the impact will be narrow but deep, with some sectors (dairy, lumber) seeing a significant increase in tariffs while others (energy) might have no tariff at all. That's consistent with the US economy slowing to 1-2% growth in 2025 and the Fed remaining on the sidelines until at least the second half of the year," the pair wrote.

Of commodities, West Texas Intermediate crude close at a six-week high on Monday after President Trump threatened to impose secondary tariffs on buyers of Russian oil as Vladimir Putin, his Russian counterpart, continues to violate a ceasefire agreement with Ukraine brokered by the United States. WTI oil for May delivery closed up $2.12 to settle at US$71.48 per barrel, the highest since Feb.11, while May Brent crude was last seen up 1.13 to US$74.76.

Gold continued to push to new record highs as safe-haven buying continues with stock markets falling ahead of fresh tariffs news. Gold for June delivery was last seen up $42.60 to US$3,159.90 per ounce.