07:00 AM EST, 02/04/2025 (MT Newswires) -- Markets were busy on Monday reacting to the announced 25% tariff on Canadian imports by the United States, and subsequent retaliation by Canada, noted Bank of Montreal (BMO).

The Canadian dollar (CAD or loonie) slid to 67.6 US cents at one point, the lowest level since 2003, before rallying back on word that the tariffs will be paused for 30 days, said the bank.

Equities, meantime, sold off on both sides of the border with banks and industrials hit relatively hard in Canada, leaving the TSX down just over 1%.

Some rate-sensitive areas of the TSX benefitted alongside a rally in Government of Canada yields, pointed out BMO. U.S. equities fared less badly (S&P 500 -0.8%), but still don't like the prospect of additional inflation pressure delaying further Federal Reserve easing even longer.

A trade war is certainly not good for equities on either side of the battle, added the bank.