04:18 PM EST, 11/28/2024 (MT Newswires) -- The Toronto Stock Exchange closed at a second-straight record high on Thursday, with no direction from U.S. markets closed for the Thanksgiving holiday as questions continue over the effect of the 25% blanket tariff on Canadian exports to the country should President-elect Donald Trump following through on threats to impose the punishing levy.

The S&P Composite Index closed up 25,543.52, up 55.22 points from Wednesday's short-lived record high. The biggest gainers were Health Care, up 1.27%, and Energy, up 0.86%. Base Metals, down 0.21%, and Information Technology, which lost 0.15%, were the biggest declining sectors.

Oil prices rose rose in light electronic trade with exchanges closed for the U.S. Thanksgiving holiday as OPEC+ delayed a planned Sunday meeting to decide on whether to begin returning some production cuts to market to Dec.5. West Texas Intermediate crude for January delivery was last seen up US$0.16 to US$68.88 per barrel, while January Brent crude, the global benchmark, was up US$0.45 to US$73.28. There are no closing prices for either contract due to the holiday.

Gold was mostly steady late afternoon even as the dollar rose in light electronic trade. Gold for February delivery was last seen down US$3.30 to US$2,661.50 per ounce.

Scotiabank on Thursday published a note entitled 'Rules of Thumb for Estimating the Impact of U.S. Tariffs on Canada', aiming to provide some estimates derived from its macro-econometric model for estimating the impact of potential tariffs on the economy, inflation, interest and exchange rates in Canada and the U.S.

"Generally," Scotia said, "tariffs disrupt the optimal allocation of resources, increase production costs and supply bottlenecks, and increase the price of imports. They also increase uncertainty and can lower investment, consumption, and trade, ultimately reducing economic growth while also impacting currency markets and monetary policy."

By virtue of these impacts, Scotia added, raising tariffs would weaken the U.S. gross domestic product and generate inflation there, putting upward pressure on the Federal Funds Rate. In Canada, the Scotia team noted, the outcome would differ based on whether the Canadian government retaliates or not.

While GDP falls either way, if Canada retaliates to a certain degree, then tariffs would be inflationary and lead to a higher Bank of Canada policy rate, Scotia said. On the other hand, if Canada does not retaliate, then demand side factors dominate, leading to lower inflation, and, in turn, a lower Bank of Canada policy rate, it added

In Canada there is a "retaliation threshold" that, once crossed, would not require the Bank of Canada to hike rates. If the government keeps its retaliation to below half the tariffs imposed by the U.S., the BoC would not need to hike rates, the bank added.

According to Scotia, U.S. GDP could decline by roughly 0.2% for each 5% increase in tariffs, while Canada could see sharper declines of up to 1.1% with full retaliation or 0.8% with no retaliation. It said these losses of economic activity are higher the higher the tariffs are.

"Under 25% tariffs, albeit we don't think this a plausible scenario, the loss of U.S. GDP could increase to up to 0.9%, and up to 5.6% in Canada with full retaliation or 3.8% without," it added.