12:18 PM EDT, 08/05/2025 (MT Newswires) -- The Toronto Stock Exchange is up near 500 points at midday with all sectors higher.

The biggest gainers are miners and healthcare, both up 2.6%.

BMO Economics in its morning note said that last week witnessed yet another era in the ever-changing Canada-U.S. trade relationship. With no trade deal reached by Aug. 1, the 'fentanyl' tariffs on non-CUSMA-compliant goods to the U.S. went from 25% to 35%.

BMO's initial read is that this won't have a meaningful short-term impact on the economy: the bank estimates about 90% of Canadian goods exports to the U.S. are CUSMA-compliant. But BMO said the odds of a trade deal to bring some degree of certainty, let alone any relief on tough sectoral tariffs, remain up in the air. And, it awaits the threatened retaliation from the Canadian government, as it had hinted at back when steel and aluminum tariffs were bumped up to 50%.

In the meantime, BMO noted, Canadian and Mexican officials are meeting for bilateral talks this week, while PM Carney and President Trump are expected to speak in the coming days.

CIBC notes that Canada's deficit in goods trade was little changed in June, but with many moving pieces in the detail due to U.S. tariff policy. The $5.9 billion shortfall in June was slightly wider than a revised $5.5 billion deficit in the prior month (previously -$5.9 billion), with the change on the month reflecting a sharper increase in imports (+1.4%) than exports (+0.9%). However, the rise in imports was linked to a one-time high-value shipment that saw a spike in industrial machinery imports. Without this, imports would have fallen by 2%, driven largely by consumer goods. On the export side, energy products rose, partly linked to higher prices. That meant that in inflation-adjusted terms total exports were actually down by 0.4% in June. The doubling of U.S. steel and aluminum tariffs early in the month had a clear impact, with exports in both areas down by just over 11%. Auto exports also continued to decline. For the second quarter, inflation-adjusted exports slumped by 9% while imports were down by 1.5%.

TD, on the key implications of the trade data. said that with a full quarter of trade data in the books, net trade is expected to put a substantial dent into second-quarter GDP growth. Trade weakness and broader trade uncertainty show no signs of abating. On a positive note, Canadian export rotation into non-U.S. markets is appearing to have some staying power.

Canadian exports are widely expected to slowly continue their bounce back from the lowest level in nearly five years in April, but It is the sectors impacted by tariffs -- steel, aluminum, autos, and energy -- that continue to disproportionally bear the brunt of the shock, TD said. Meanwhile, we may be nearing the upper-end of USMCA compliant exports, as the compliance rate of Canadian goods crossing the border has flatlined at around 60% for the last three months.