April 3 (Reuters) - Canada's main index tumbled on Thursday in broad-based declines as U.S. President Donald Trump's reciprocal tariffs escalated the global trade war and sparked worries of a recession.
Toronto Stock Exchange's S&P/TSX composite index was down 3.29% at 24,474.92 points, on pace for its worst daily drop since June 2020.
Trump's new tariffs announced on Wednesday set a baseline of 10% for all imports and higher duties on some of the biggest trading partners of U.S.
But Canada avoided the new levies as goods that comply with the USMCA trade agreement between the U.S., Mexico, and Canada will largely remain exempt, excluding autos, steel and aluminum.
"But it doesn't look like investors are breathing a sigh of relief as Canadian exports to the U.S. are still subject to 25% tariff," said Brian Madden, chief investment officer and portfolio manager at First Avenue Investment Counsel.
"Prime Minister Mark Carney promised to respond and retaliate ... so the window of risk for Canada remains open because an aggressive retaliation could trigger an escalation on the part of the U.S."
Trump already imposed 25% tariffs on Canada and Mexico on March 4 for not doing enough to curb migration and fentanyl trafficking.
On TSX, information and technology stocks fell 7%, hitting its lowest in five months. Shopify was among the worst performers on the index, down 16.1%.
Energy stocks fell 4.3%, tracking declines in oil prices as the decision by OPEC+ group to speed up its unwinding of oil output cuts in May compounded the already-heavy losses of Trump's tariffs.
Materials sectors was down 3.6% as base metals fell. Copper hit a one-month low as investors feared the new U.S. levies would affect industrial demand for metals.
Separately, Canada reported an unexpected trade deficit in February.
Reporting by Ragini Mathur and Sanchayaita Roy in Bengaluru; Editing by Sahal Muhammed
Source: Reuters