04:31 PM EDT, 07/21/2026 (MT Newswires) -- The S&P/TSX Composite Index rose sharply on Tuesday as gains in base metals stocks and higher gold and oil prices outweighed concerns over escalating trade tensions between Canada and the United States.

The index closed up 408.76 points, or 1.17%, to 35,369.08, with the majority of sectors closing higher. Base Metals led gainers, up 5.39%, while Telecom led decliners, down 0.31%.

In commodities, gold traded higher on Tuesday, rising for a second-straight session after finding support at the $4,000 mark despite a stronger US dollar and higher Treasury yields. The precious metal for August delivery was last seen up $74.50, or 1.86%, to $4,090.40 per ounce.

Meanwhile, West Texas Intermediate (WTI) crude oil rose on Tuesday, climbing for a third straight session as fighting between Iran and the US continues to constrain Persian Gulf supply.

WTI crude oil for August delivery closed up $1.68, or 2%, to settle at $84.91 per barrel, while September Brent was last seen up $1.70, or 1.9%, to $90.92.

Trade tensions also remained in focus after the United States unveiled a new 50% tariff on a broad range of Canadian goods late Monday.

In response, Prime Minister Mark Carney reiterated Canada's support for free and fair trade. The prime minister said the government remains committed to taking all necessary steps to build economic resilience and protect the interests of Canadian workers, farmers, businesses and families.

Carney said Tuesday that he and President Trump agreed during a morning phone call to intensify trade negotiations in the coming weeks, CTV News reported.

Ontario Premier Doug Ford on Tuesday said Canada vows to stand firm and defend its interests amid rising tensions with its biggest trading partner.

"Together, we'll stand united. We'll never back down. We'll never roll over," Ford wrote in a X post.

Using Section 338 of the Tariff Act of 1930, the US administration accused Canada of unfairly discriminating against American products in sectors including dairy, alcoholic beverages and autos. The affected goods will lose US-Mexico-Canada Agreement exemption eligibility, with the new tariffs set to take effect in 30 days.

The White House said that by doing so, President Trump is offsetting the burden and disadvantage on US commerce from Canada's discriminatory treatment and is leveling the playing field for crucial American exports - cars, alcohol, and dairy.

Citing an example, White House said Canada imposes certain tariffs and quotas on cars imported to Canada from the United States, but not on imports from other countries. From April 2025 through March 2026, Canadian imports of US motor vehicles decreased by approximately 22% annually, or $5.6 billion.

Corpay's rough estimates suggest that the overall increase in potential levies would amount to around $19.1 billion, equivalent to 4.6% of Canada's US exports, implying that the average tariff rate applied to Canadian goods could rise by about 2.3 percentage points.

"This would undoubtedly be painful for the affected Canadian industrial sectors, but should be substantially less damaging to the economy than initially feared," wrote Karl Schamotta, Corpay's chief market strategist, in a late Monday note.

Commerzbank said the Canadian dollar's initial reaction to Monday's White House new tariff announcement was relatively muted, but the US trade dispute will drive the Canadian dollar outlook.

"Given the multitude of threats Donald Trump has made in recent months - not all of which have been carried out - the muted reaction seems reasonable for now," wrote Commerzbank FX and Commodity Analyst Volkmar Baur in the note. That said, the move introduces renewed uncertainty for the Canadian dollar, with the loss of preferential treatment for affected products under the US-Mexico-Canada Agreement potentially weighing on exports and keeping trade tensions in focus for currency markets, he added.

Whereas CIBC Economics said the latest US tariff announcement is not large enough to change its outlook for the Bank of Canada. The measures affect just under 5.5% of Canada's exports to the United States and would lift the average Canada-US tariff rate by slightly more than 2.5 percentage points.

"We see this as a sector-specific development rather than a broad macroeconomic story, though it is clearly significant for the industries directly affected," wrote CIBC's Benjamin Tal in the note.