04:32 PM EDT, 08/05/2025 (MT Newswires) -- Canadian investors on Tuesday returned refreshed after a holiday long weekend by pushing the Toronto Stock Exchange up to a fresh record close, buoyed by data showing most Canadian exports to the United States remained duty free in June, even as National Bank warned the full impact of this year's trade war is still to be seen.

Despite mixed commodity prices, the resources heavy S&P/TSX Composite Index ended the day up 549.65 points, or 2%, to 27,570.88, ending a three-day losing streak late last week that came after the index closed at a prior record 27,539.88 on July 29.

Most sectors were higher, led by Info Tech up 3% and then Health Care and Base Metals, both up 2.7%. The Battery Metals Index was down near 0.7%.

As with most days of late, trade related comments and data were the main focus for investors. Prime Minister Mark Carney had been keeping a pretty low profile since Aug. 1 when the Trump administration implemented a 35% tariff on Canadian goods entering the United States not already covered under the existing North American free trade agreement.

But Carney was shown on Canada's CBC News on Tuesday afternoon taking questions in British Columbia on the federal government's response to wildfires in that province and elsewhere, after detailing support for the Canadian softwood lumber industry. During a press conference the Prime Minister said he has not spoken to U.S. President Trump in recent days, before adding they would speak when it makes sense to do so. Carney was also asked would Canada impose retaliatory measures beyond those already in place and he noted 85% of trade with the U.S. right now is still tariff free.

The Prime Minister also announced federal government support for the Canadian softwood lumber industry with $700 million in loan guarantees and $500 million to help it diversify markets after the United States last month raised anti-dumping duties on imports of Canadian softwood.

In related data news, RBC noted Canada's trade deficit widened to $5.9 billion in June from a $5.5 billion shortfall in May, but reportedly entirely due to a large "one time high-value" equipment import from the United States to Newfoundland's offshore oil production sector. RBC said excluding a $2.1 billion jump in the equipment import component that contained those products, imports of goods would have declined by another 1.8% in June, and the trade deficit would have narrowed to $3.8 billion overall. According to RBC, that large equipment purchase should not impact overall GDP estimates, saying the import increase will mechanically subtract from GDP, but should be offset by higher business equipment spending.

For RBC, the bottom line is that a "plunge" in Q2 Canadian export volumes is on track to substantially subtract from Canadian GDP in Q2 following a pre-tariff surge in Q1 when U.S. importers rushed to front-run tariffs. But, the bank said, there was further "encouraging" evidence in June that an exemption for trade compliant with the USMCA/CUSMA free trade agreement is backstopping duty free access to the U.S. market for most Canadian exports.

RBC noted sector specific tariffs on U.S. imports from Canada of products like steel and aluminum and the non-U.S. content of finished motor vehicles are raising costs significantly for U.S. buyers, but the U.S. Census Bureau reported 92% of Canadian exports to the U.S. crossed the border duty free in June, up slightly from 91% in May and 89% in April.

The bank also noted the average effective U.S. tariff rate on imports from Canada remained one of the lowest among U.S. trading partners at 2.4%, well-below the 8.9% average U.S. rate on all imports in June. That effective tariff rate on imports from Canada will rise with an increase in the rate on products not compliant with the existing trade agreement between the two countries to 35% in August, up from 25% in June, but that increase applies to a relatively small share, RBC estimates near 6%, of exports to the United States that are not compliant.

"We," RBC said, "continue to expect that current rules, if maintained as currently in place, would leave Canada with the lowest tariff rate of any major U.S. trade partner -- putting Canadian exporters in a stronger relative position to compete for U.S. import market share than other countries. The concern remains, though, that U.S. tariff hikes have been so large, and uncertainty so high surrounding their announcements, that U.S. economic growth will slow with negative implications for close U.S. trade partners like Canada."

It added: "The total U.S. effective tariff rate on imports from all countries continued to rise in June, hitting its highest level since the 1940s, and there is early evidence that U.S. labour markets are softening as a result, particularly in the U.S. industrial sector where ties with the Canadian economy are extremely close."

Meanwhile, Ethan Currie at National Bank, in noting the U.S. merchandise deficit continued to shrink in June, primarily the result of falling imports due to both earlier front-loading and higher costs in the form of tariffs. With adjusted 'reciprocal' levies set to take hold starting Thursday, it's no wonder two way trade with the tariff capital of the world is dipping, he added.

Currie said while U.S.-assigned tariff rates have come down from their threatened April levels, they are still "massively inflated" relative to last year. Indeed, he noted, the average effective tariff rate (AETR) resides at levels not seen since WWII. "While we await 'hard' data via customs revenues and trade balances to settle on the 2025 figure, we estimate that the U.S. AETR is above 15% according to current policy. This number remains fluid as trade behaviour adjusts and presumably, countries with more favourable tariffs may see relatively more U.S. business," Currie added.

Outside of reciprocal levies, and court rulings which could challenge the imposition of such under the International Emergency Economic Powers Act (IEEPA), sectoral tariffs remain very much in focus. Fentanyl-related levies on Canada, Mexico, and China make trade deals for these partners a "unique case", Currie noted.

"Thanks to the USMCA," Currie said, "Canada's exposure remains better than most, and the 'headline' 35% is not representative of the overall tariffs being paid."

"Still," he added, "we see punitive broad-based tariffs, if sustained, and associated uncertainty/volatility weighing on long-run domestic and global growth. Clearly, this administration is more protectionist than Trump's first time in office, which is clear when comparing customs duties. It's also consistent with a stickier term premium. However, it might not be so obvious when aligning equity and Greenback performance. The full impact of this year's trade war is still to be seen, in our view."

Of commodities, gold prices rose on Tuesday as the dollar gave up early gains after the United States reported its trade deficit fell to a near two-year low in June as imports slowed. Gold for December delivery was last seen up $7.50 to US$3,433.30 per ounce.

But West Texas Intermediate oil closed lower for a fourth day as traders focus on rising supply and weaker demand as growth slows. WTI crude oil for September delivery closed down $1.13 to settle at US$65.16 per barrel, while October Brent oil was last seen down $1.06 to US$67.70.