04:32 PM EDT, 04/07/2025 (MT Newswires) -- The Toronto Stock Exchange fell for a third-straight session on Monday, as global stock markets continue to tumble on fears U.S. President Donald Trump's imposition of broad-based tariffs will lead to inflation and stagnant growth as Canadian business turn pessimistic.

The S&P/TSX Composite Index closed down 334.01 points to 22,850.46, bringing the market's total drop since Trump's April 2 'Liberation Day' announcement to nearly 2,450 points, or 9.7%, and leaving the index down 11% from its January record high.

Health Care, down 2.21%, is the biggest decliner, followed by Energy and Financials, down 1.92% and 2.00%, respectively. Base Metals bucked the trend, trading up 0.94%. Overall, 1,798 issues closed lower on Monday, 343 rose and 89 ended unchanged.

Little comfort is available to investors that Trump will back down from the tariff policies as he threatened on Monday to impose additional tariffs on China, in response to China imposing a reciprocal tariffs on imports from the United States.

The magnitude of the announced tariffs will likely serve as a headwind to economic growth in the U.S., notes Edward Jones in its weekly market wrap.

"The recent tariffs will likely increase inflation and are causing many to consider a greater probability of a recession," JPMorgan chief executive Jamie Dimon wrote in his annual letter to shareholders Monday. "Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth."

The market turmoil is likely to add to the pessimism already felt by Canadian consumers and businesses amid a broadening trade battle between Canada and the United States following Trump's January inauguration. The Bank of Canada's first-quarter Canadian Survey of Consumer Expectations (CSCE) showed two-thirds of Canadian expect a recession this year, while business expect to restrain spending and pause hiring, even before the new U.S. levies were announced.

"Worries about international trade threats were intensifying for Canadian businesses even ahead of last week's 'reciprocal' tariff announcement that rocked global financial markets," Claire Fan, a senior economist at RBC Economics, wrote. "Business sentiment deteriorated significantly as reported in the Q1 Business Outlook Survey (BOS), with a third of firms expecting a recession in Canada in the next year, up from 15% on average in the prior two quarters.

"To be sure, those concerns were already present in the last survey in Q4 although the domestic Canadian demand backdrop at the time was still bright, thanks to earlier Bank of Canada interest rate cuts. That optimism was largely eroded in Q1."

Near-term inflation expectations among businesses are also on the rise, with expectations inflation in the current fiscal year will rise to 3.6%, up from 2.8% previously.

"Canadian businesses had generally been growing more optimistic last year after pessimism peaked in late 2023. This improvement was consistent with a pick-up in GDP growth and hiring. In 2025, this improvement has been abruptly terminated," National Bank economists Taylor Schleich and Ethan Currie wrote.

Gold traded lower late afternoon on Monday as the dollar and treasury yield rose as global stock markets continue to weaken after U.S. President Donald Trump last week imposed hefty tariffs on most of the country's trading partners. Gold for June delivery was last seen down US$43.00 to US$2,992.400 per ounce.

West Texas Intermediate (WTI) crude oil on Monday closed at the lowest since April 2021 on the continuing market turmoil that followed U.S. President Donald Trump's decision to impose widespread tariffs on the country's trading partners. WTI crude for May delivery closed down US$1.29 to settle at US$60.70 per barrel while June Brent crude was last seen down US$1.06 to US$64.52.

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