04:25 PM EDT, 06/12/2025 (MT Newswires) -- The Toronto Stock Exchange closed at a second-straight record high on Thursday as investors appear confident that an all-out global trade war can still be avoided, despite ongoing threats from the United States against a plethora of nations, including Canada, while National Bank offered some thoughts for Canadians around "gaming out" trade talks with their North American neighbors.

The S&P/TSX Composite Index ended the session up 91.5 points at 26,615.75, even with commodity prices mixed, and some sectors lower. Among sectors, Telecoms, up 1.2%, and Health Care, up 1.1%, were the biggest gainers. But the Battery Metals Index was down 1.3%, Info Tech was down near 0.8% and Base Metals eased 0.6%.

Of individual stocks, Optiva ( RKNEF ) saw its shares climb more than 100%, climbing $1.36 to $2.66. At the request of the Canadian Investment Regulatory Organization, Optiva ( RKNEF ) confirmed it is not aware of any material undisclosed information related to the company that would account for the increase. More than 50,000 shares changed hands, near 10 times the average.

On trade and tariffs, National Bank Geopolitical Analyst Angelo Katsoras in a note entitled 'Geopolitical Briefing: Gaming out trade negotiations with the United States' said the bottom line for Canadians is that Prime Minister Mark Carney must convince U.S. President Trump that Canada is essential to the U.S. supply chain as the country rebuilds its industrial base amid rising energy costs and logistical challenges.

According to Katsoras, Trump's reversal of many of his tariffs has been "a sliver of good news". For example, he noted, after imposing a 25% tariff on all Canadian goods, Trump soon granted exemptions for most products compliant with USMCA rules of origin. Though, he also noted, notable exemptions remain, citing automobiles, steel, and aluminum. Katsoras said: "This allows the vast majority of Canadian exports to enter the United States tariff free. More rollbacks may follow as economic concerns grow and the U.S. mid-term elections approach, with Republicans trying to hold on to their slim majority in Congress."

When we examine the longevity of many of Trump's tariffs, it is important to note that, while the President secured a solid victory in the 2024 election, it was not a landslide. He garnered only 49.8% of the popular vote, just 1.5 percentage points more than the Democratic candidate, Katsoras noted.

Future U.S. administrations, whether Republican or Democratic, are likely to take a less protectionist approach toward Canada, provided that Canada aligns with U.S. positions on tariffs and geopolitical priorities, Katsoras said. However, he added, a return to the level of free trade seen in past decades is unlikely. Katsoras noted that although Trump's embrace of tariffs is unprecedented, support for protectionist measures has grown across both parties, particularly with respect to China. President Biden retained many of Trump's tariffs and expanded them in key sectors. His Inflation Reduction Act introduced hundreds of billions of dollars in subsidies for favored industries, prompting Canada and other countries to increase their own subsidies to remain competitive, Katsoras said

Additionally, once tariffs are in place, industries that benefit from them often lobby to keep some of them in place. A notable example of this is the 25% tariff on European trucks imposed in 1964 and still in effect today, Katsoras added.

Finally, Katsoras said, Canada's deep economic and political ties with the United States leave little room for major policy differences in areas such as trade, defense, and regulations. Similar to smaller nations neighboring China or smaller E.U. member states aligning with dominant regional powers, Canada often follows Washington's lead, Katsoras added. For instance, he noted under Biden, Canada mirrored U.S. actions by imposing a 100% tariff on Chinese EVs and a 25% tariff on Chinese steel and aluminum. "Eliminating these tariffs would greatly jeopardize access to the U.S. market. This pattern is likely to continue in an era of rising protectionism, reshoring and intensifying global rivalries."

Meanwhile, the chief economist at one of Europe's largest banks said Canada stands to gain as global investors rethink their focus on the U.S, according to a report from The Canadian Press.

BNP Paribas chief economist Isabelle Mateos y Lago said in an interview that the volatility in the U.S. is making investors regain an appreciation of the value of stable returns and predictability, even if it means giving up some of the outsized gains it has offered in recent years.

"The general situation is every investor on the face of the planet has been very overweight (the) U.S. economy, and is now going through a thought process of thinking, maybe I shouldn't be so overweight the U.S. economy, and I need to diversify and find alternatives," she said.

"So every other geography is going through a bit of a beauty contest right now in the eyes of global investors, and has an opportunity to shine, and I think Canada is one of those."

Mateos y Lago, who was in Toronto this week visiting clients, said Canada's recent election helps give the country some momentum, while efforts to address structural barriers like internal trade will also help growth. "It's a moment of opportunity and so I would be shocked if Canada didn't benefit from it."

Among commodities today, gold was sharply higher late afternoon on Thursday as rising Middle East tensions supports safe-haven buying and the dollar fell to the lowest in three years amid slowing U.S. inflation. Gold for August delivery was last seen up $65.20 to US$3.408.90 per ounce.

But West Texas Intermediate crude oil fell off a five-week high even as the dollar fell to the lowest in three years and Middle East tensions are rising. WTI oil for July delivery closed down $0.11 to settle at US$68.04 per barrel, while August Brent crude was last seen down $0.08 to US$69.71.