04:23 PM EST, 02/04/2025 (MT Newswires) -- The Toronto Stock Exchange closed with a small gain on Tuesday as the immediate threat of tariffs on Canadian exports to the United States eased, but only for 30 days.

The S&P/TSX Composite Index closed up 37.59 points to end at at 25,279.35. Energy, up 1.06%, and Base Metals, up 2.76%, were the biggest gainers on the day. Financials and Utilities, down 0.92% and 0.34%, were the sole decliners.

On individual stocks, TMX Group (X.TO) on reported adjusted fourth-quarter earning per share of $0.48, up 31% and ahead of the Street $0.44 "This is another solid quarter for TMX. Revenues beat in the right places (e.g., Trayport, VettaFi, Issuer Services), which helped to deliver a solid 9% EPS beat," National Bank analyst Jaeme Gloyn wrote.

Donald Trump on Monday delayed the start of tariffs on imports from Canada and Mexico by 30 days, within hours of them coming into effect. Earlier Monday, he did the same for Mexico. But the 25% tariff on all non-energy imports from Canada and 10% tariff on energy imports, along with the 25% tariff on all imports from Mexico, are still pending.

The fact that the TSX didn't quite recoup more of Monday's losses today may have been reflected in a note from Michael Gregory, Deputy Chief Economist at BMO Capital Markets, who published a forecast update covering Canada and noted it is too early to declare victory the tariff fight.

After President Trump signed the executive order on February 1 putting the tariffs into place, BMO factored them into its Canadian and U.S. economic forecasts. Gregory noted that for Canada, the broad theme, compared to BMO's base case, was much weaker growth, moderately higher inflation, much lower Bank of Canada policy rates, and a much weaker Canadian dollar. For the U.S., the broad theme was modestly slower growth and faster inflation.

Gregory said these tariffs, for reasons named in the executive order, have "shifted from being an essential certainty to now being a risk". BMO's original, pre-Feb. 1, base case already factored in some risk of tariffs. Its forecast for Canada growth was dampened by lower business spending than would have otherwise be the case owing to the uncertainty, with the BoC continuing to ease policy through the summer. Meanwhile, Canada's dollar languished above C$1.40 for much of the year. Consequently, Gregory said, BMO has mostly returned to where it was before, in terms of its forecast. "But this tariff 'scare' is leaving a legacy," he added.

According to Gregory, it raises the risk of tariffs being used more often for objectives other than international trade policy. He said: "More importantly, it leaves us even more uneasy about what to expect on, and after, April 1. By that date, there will be three reports delivered to the President that should be full of tariff recommendations backed by formal investigations. This should set the stage for more Section 232, national security, and Section 301, unfair trade practices, tariffs. And, more profoundly, they will probably make the case for a global supplementary tariff. Will Canada be shielded from such in a renegotiated USMCA? Lots of uncertainty, indeed."

In turn, BMO's new base case has slight weaker Canada growth than the original, at 1.7% vs. 1.9% for 2025, a slightly weaker loonie and "meaningfully more downside risk" to its BoC call of 50 bps worth of rate cuts by summer. "What the latest episode has taught us is that even with signed legal documents and hard deadlines, this is still a fluid situation. Consequently, this is unlikely to be our last forecast alteration," Gregory added.

A Macquarie strategist on Tuesday also noted the remaining risk of tariffs. Thierry Wizman, Global FX & Rates Strategist, said the US administration's decision to call off import tariffs on Mexico and Canada for 30 days supports Macquarie's view that, in the final analysis, it will be concessions and not tariffs that will be the norm for US allies. "That's as it was in 2018-2019, too," he noted.

Wizman added: "The period of doubt, during which worries about 'tariff risk' prevails in the market -- is not over yet. It could last through Q1 and into Q2. Traders may revisit those doubts in 30 days, as Trump tries to extract more concessions from Mexico and Canada, and then the EU."