04:22 PM EDT, 06/19/2025 (MT Newswires) -- The Toronto Stock Exchange posted a small loss Thursday as trade war concerns were revived, with Canada prepping to adjust metal counter-tariffs against the United States from next month, raising the prospect of a costly dispute that some market watchers feel could cause a recession.

The S&P/TSX Composite Index closed down 53.85 points at 26,506.0, though it remains within 120 points of the record closing high hit on June 12. Sectors were mixed with the Battery Metals Index the biggest gainer, up near 1%. Health Care was the biggest loser, but down just 0.85%.

Prime Minister Mark Carney said Thursday Canada will adjust counter tariffs on steel and aluminum products from July 21 to levels "consistent" with progress made during trade talks with the U.S. between now and his deadline. July 21 will mark the end of a 30-day trade deal deadline announced earlier this week after Carney and U.S. President Donald Trump met on the sidelines of the G7 Summit in Canada.

While Carney did not specify what those adjusted tariffs would be, Trump has already placed a 50% tariff on the metals.

In addition to adjusting counter tariffs, Canada will limit federal procurement policies to favor Canadian suppliers and "reliable trading partners" by June 30, according to a press release, CTV News noted.

Third, CTV also noted, the government will unleash new, retroactive tariff quota rates, at 100% of 2024 levels, on imports of steel products from non-free trade agreement countries. More tariff measures will be adopted in the coming weeks to respond to "unfair trade in the steel and aluminum sectors, which are exacerbated by U.S. actions," CTV cited the news release as adding.

The federal government will also create two task forces, one for steel and the other for aluminum, to closely monitor trade and trends.

All of this could be seen as a step backwards after the June Business Barometer survey by the Canadian Federation of Independent Business (CFIB), released earlier today, showed the long-term optimism index gained 7.1 points, reaching 47.3 in June. Still, the CFIB noted, it remains below the breakeven point of 50, even as it has been steadily increasing for the past three months.

CFIB noted average price plans remained unchanged at 2.9%, and similarly wage plans were almost the same at 2.2%. Weak consumer demand, while easing, remains the top limitation for 51% of small firms.

"Early signs point to small businesses getting used to tariffs and finding alternatives, but many are not out of the woods just yet. While most indicators stayed the same or slightly improved, businesses are still feeling the impacts of the lingering inflation, tariffs, counter-tariffs and overall economic uncertainty," said Simon Gaudreault, CFIB's chief economist and vice-president of research.

Taylor Schleich, Director, Economics and Strategy at National Bank Financial, noted measures of business confidence, including the CFIB's released this morning, have improved over the last three months, although sentiment remains subdued. "And while it could rebound further if a trade deal is struck," Schleich said, "it's not obvious that will be sufficient to fully heal business confidence."

"Indeed," he added, "half of small businesses surveyed cite insufficient demand as a factor limiting growth. Moreover, confidence has been hit in all corners of the economy, not just the industries most directly impacted by tariffs (e.g., manufacturing). We know GDP growth will be soft in Q2 (as the Q1 export surge/inventory build unwinds) and below potential growth is likely to continue thereafter. At the same time, activity won't be as weak as it would be in a more prolonged trade spat, which was feared earlier."

Of commodities, oil rose to a fresh five month high as Israel and Iran trade air strikes while U.S. President Donald Trump mulls entering the fray. With U.S. markets closed for the Juneteenth holiday, West Texas Intermediate crude oil was last seen up $0.02 to US$75.16 per barrel in electronic trade, the highest since Jan.17, while August Brent crude was up $2.15 to US$78.85.

But gold traded lower late afternoon on Thursday, a day after the Federal Reserve left U.S. interest rates unchanged but said cuts are likely this year. Gold for August delivery was last seen down $20.70 to US$3,387.40 per ounce. continuing to trade below the June 13 record high of $3,452.80.