China tariffs slam markets

North American markets closed down sharply Thursday as U.S. President Donald Trump stoked fears of rising protectionism by moving to impose China tariffs.

The U.S. trade actions include imposing restrictions on Chinese investment and tariffs on some $62 billion worth of Chinese imports, prompting China to say the country will defend its interests.

The moves add to fears of escalating trade wars and the effects they could have on the global economy, said Anish Chopra, managing director with Portfolio Management Corp.

"It's the trend towards more protectionism in the United States. These are just opening moves. How long does it last, how far can this go, what other goods are going to get hit if they keep going along the path?," he said.

"Globalization, opening of global trade, tends to be positive for global growth, so if you're going down this protectionist path, it's not a positive for global growth."

Trade jitters sent the Toronto Stock Exchange's S&P/TSX composite index down 275.35 points to 15,399.93 in broad-based declines led by base metals.

"The Canadian market's also reacting to Trump's China tariff plan. It just sets a negative tone for global growth, and so everyone's going to get hit if tariffs rise across the world, so even Canada's growth will slow down," said Chopra.

U.S. declines were steeper, with industrial and technology companies heavily dependent on foreign trade especially hit.

The Dow Jones industrial average closed down 724.42 points to 23,957.89. The S&P 500 index was down 68.24 points to 2,643.69 and the Nasdaq composite index was down 178.61 points to 7,166.68.

However, there were also signs of Trump's flexibility on tariff measures Thursday, with the administration saying that the European Union, Australia, Argentina, Brazil and South Korea will get an initial exemption from steel and aluminum tariffs as Canada and Mexico have already secured.

The tariff moves came a day after the U.S. Federal Reserve announced a rate hike and said the U.S. economy and the job market continued to improve over the last two months. The Fed expects to raise rates three times this year, although some investors think a fourth increase is possible.

Reaction to the Fed's move had largely played out Wednesday, said Chopra, with today's market movements focused on tariffs.

The Canadian dollar closed at 77.47 cents US, up 0.30 of a US cent.

The May crude contract closed down 87 cents to US$64.30 per barrel and the May natural gas contract, which has become the new benchmark, ended down a penny at US$2.66 per mmBTU.

The April gold contract closed up $5.90 to US$1,327.40 an ounce and the May copper contract was down four cents to US$3.02 a pound.

In Toronto, marijuana producer Aphria Inc. closed down 3.10 per cent, Canopy Growth Corp. down 4.29 per cent and Aurora Cannabis Inc. closed down 4.46 per cent as Canada's Senate prepared for a critical vote on the Liberal government's bill to legalize marijuana.

Cenovus Energy Inc. closed down 5.56 per cent after it said its oilsands operations have been operating at reduced rates due to wider-than-normal light-heavy oil price differentials and pipeline capacity constraints.

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