12:18 PM EDT, 03/12/2025 (MT Newswires) -- The Toronto Stock Exchange is up 150 points at midday, having lost more than 500 points over the previous two days. The Bank of Canada cut rates and the Canadian federal government detailed near $30 billion in retaliatory tariffs to help it fight a trade war with the United States after U.S. President Donald Trump just after midnight put 25% import levies on steel and aluminum against all countries, including Canada.

Most sectors are higher at midday, with energy (+1.7%) and info tech (+1.7%), leading, while telecoms, down 1.4%, is the biggest decliner.

The Bank of Canada as expected cut its policy rate by 25bps to 2.75%, noting that trade tensions with the U.S. will likely slow the pace of economic growth and increase inflationary pressures.

Veteran market watcher David Rosenberg noted while being mindful of the initial inflationary impact from the trade war, the Boc seems more focused on the downside macro risks. So, he said, the BoC will be cutting rates further from here and the Canadian dollar will be destined to reach or breach the January 2002 all-time low of C$1.6128.

According to Rosenberg, just to bring the Canadian economy out of its current excess supply (output gap) alone would mean a move weaker to C$1.55 in any event. All roads lead to a weaker loonie, which will be needed in any event to blunt the hit to the domestic resource and industrial sector, he said. So, Rosenberg added, plan for a 63 cent (U.S.) Canadian dollar, a 1.5% policy rate, and a 2.5% yield on the 10-year GoC bond as the fallout from the Trump-induced tariff war on America's so-called 'friend' north of the border.

And, Rosenberg said, focus your TSX exposure on the "bonds in drag" (Banks, REITs, Communication Services, and Utilities) and the beneficiaries of a weaker dollar (Travel/Tourism) and avoid the areas that are the most affected by the Trump trade action (Industrials, Materials, and consumer products).

In relation to the brewing tariffs war, Canada is levelling reciprocal dollar-for-dollar tariffs on U.S. steel and aluminum imports, in response to Trump's move. The federal government's latest countermeasures are worth near $30 billion and will come into effect at 12:01am tomorrow, Thursday. The 25% tariffs will hit steel products worth $12.6 billion and aluminum products worth $3 billion. In addition, Canada is hitting another $14.2 billion worth of imported U.S. goods with fresh tariffs. These measures are in addition to the $30 billion worth in tariffs that Canada has already imposed earlier this month, and all of that is part of the total $155 billion in tariffs planned by the Canadians.

On the U.S. front, Reuters noted U.S. Commerce Secretary Howard Lutnick said nothing would stop Trump's expanded 25% tariffs on steel and aluminum until U.S. domestic production is strengthened, and added Trump will add copper to his trade protections. Lutnick also told Fox Business Network that a meeting he plans to hold with Ontario Premier Doug Ford will seek to "lower the temperature" between the U.S. and Canada. However, Lutnick said he will wait for Mark Carney to be fully installed as prime minister before negotiating on trade at a national level. "So I think it's just to level-set things, make sure we know each other, and then we're going to negotiate with all of Canada," Lutnick said on the meeting with Ford.