# The US-Canada Trade War Just Escalated Again, and the TSX Is Feeling It
The trade war between the US and Canada, once unthinkable between two of the closest allies on earth, keeps getting worse. In the latest escalation, Washington expanded its restrictions on Canadian goods, Canada retaliated, and the Toronto Stock Exchange is bearing the strain. Here is what happened and how it is splitting Canadian stocks into winners and losers.
What Just Happened?
The US expanded trade restrictions on Canada, banning imports of a range of products including alcoholic beverages, motorcycles and dairy. That comes on top of the roughly 50% tariffs Washington placed on about $20 billion of Canadian goods last month. Canada retaliated with its own tariffs on about $20 billion of US products, which took effect this week. President Trump also warned that aircraft maker Bombardier would be shut out of the US market unless it moves production stateside.
This is a full-blown, tit-for-tat trade war between two economies that are deeply intertwined, and markets do not like the uncertainty.
How Is the TSX Reacting?
Not well. The S&P/TSX Composite Index fell about 1.07% in one session, dropping more than 390 points to around 36,123, then slid another 0.6% to roughly 35,907 as the new US restrictions landed. Rising oil prices and climbing Treasury yields, the same forces pressuring US markets, added to the pain.
But underneath the index, there is a clear split.
The Losers: Banks
Canada's big banks came under pressure, hit by both the trade uncertainty and rising rate-hike expectations that cloud the lending outlook. In recent sessions Royal Bank (RY.TO) and TD Bank (TD.TO) fell around 0.9%, Bank of Montreal (BMO.TO) lost about 1.3%, and CIBC shed roughly 1.5%. Consumer and industrial names exposed to trade, like BRP, dropped sharply too.
The Winners: Gold Miners
The bright spot was precious metals. With investors seeking safety amid the turmoil, gold prices rose, and Canada's big miners rallied. Agnico Eagle (AEM.TO) added about 0.7%, Barrick (ABX.TO) rose around 1.2%, and Wheaton Precious Metals (WPM.TO) gained roughly 1.4%. In a trade war, gold's reputation as a safe haven does exactly what it is supposed to.
What It Means for Investors
The TSX is unusually exposed to this story. It is heavy in banks (hurt by the trade and rate backdrop) and heavy in commodities (where gold miners benefit from the fear). That is why the index can look weak on the surface while parts of it quietly rally.
Want to see which Canadian names are holding up and which are not? See our roundups of the best-performing Canadian stocks and worst-performing Canadian stocks of 2026, and screen the market with our Stock Screener.
The Bottom Line: A Split Market in a Trade War
The US-Canada trade war is a real headwind for the TSX, but it is not uniform. It punishes banks and trade-exposed industrials while rewarding gold miners, a textbook risk-off rotation playing out inside a single index.
Our take: Stay selective, not bearish on all of Canada. The trade war is genuine risk, and banks may stay under pressure until there is clarity. But the same fear lifting gold makes Canadian miners a natural hedge. Rather than avoid the TSX entirely, this is a market where sector selection matters more than the headline index level. Key risk to watch: a further escalation, or a breakdown in US-Canada talks, which would deepen the hit to banks and trade-sensitive sectors.---
This article is for informational purposes only and is not financial advice. Always do your own research before investing.
