Everything You Need to Know on Tuesday: Canada Considers Escalating Chinese EV Tariffs in Response to U.S. Policy, Says Trade Minister

Good morning mooers! Here are things you need to know about today's market:

● S&P/TSX 60 Index Standard Futures are trading at 1,342.60, down 0.19%

● Canada considers escalating Chinese EV tariffs in response to U.S. policy, says trade minister

● April inflation data to be released by Statistics Canada

● Crude oil demand remains weak in US, China while oil supply tightens, ANZ Bank says

Today, the Canadian dollar is trading at 73.42 cents US.

S&P/TSX 60 Index Standard Futures are trading at 1,342.60, down 0.19% from previous close.

In the wake of substantial new U.S. tariffs on Chinese electric vehicles (EVs), Canada is contemplating a similar move to increase its own tariffs on these imports, according to Trade Minister Mary Ng.

During a telephone interview from Peru, amid her participation in the Asia-Pacific Economic Cooperation (APEC) forum meetings, Ng mentioned, "We are looking at this very carefully and we have an open dialogue with our American partners."

This consideration follows the recent announcement by the Biden administration imposing significant tariffs on various Chinese goods, including semiconductors and solar cells. The tariffs will also impact Chinese-made EVs, hiking the rate from 27.5 percent to a striking 102.5 percent later this year.

Canada, which currently enforces a moderate tariff of approximately 6 percent on Chinese vehicles, is in discussions with the U.S. to determine whether an adjustment to its tariff rates is necessary. Ng reiterated the government's focus on enhancing domestic EV production, highlighting ongoing partnerships with global automakers like Honda and Volkswagen to develop electric vehicles and related technologies within Ontario.

Statistics Canada is scheduled to publish the consumer price index report for April this morning at 8:30AM, providing fresh insights into the country's inflation trends.

Market analysts predict a slight decrease in the annual inflation rate for April, following a 2.9 percent figure in March. RBC projects a 2.7 percent rise in prices for April year-over-year.

With the upcoming interest rate decision on June 5, the Bank of Canada will be scrutinizing today's inflation report. Although financial markets are currently anticipating a rate cut in July, the latest inflation statistics are expected to play a pivotal role in shaping those forecasts.

The Bank of Canada has hinted at a possible reduction in interest rates, contingent on witnessing a more extended period of diminishing inflation.

Crude oil demand remains soft in the U.S. and China, with gasoline consumption seasonally low in the U.S., but demand is expected to bounce back as driving rates increase over the summer, ANZ Bank said in a research note on Monday.

U.S. gasoline demand is seasonally tracking at its lowest since 2020, while China's oil demand fell 3% month over month to 14.6 million barrels per day in April, according to ANZ Bank.

Meanwhile, oil supply is getting tighter as the Organization of the Petroleum Exporting Countries and allied producers continue to cut output and production growth is stalling in the U.S., the bank noted.

The increase in U.S. inventories is seen to reverse as a result of slowing production growth and seasonal demand in June, ANZ Bank said.

The natural gas market appears to be supported by supply issues and strong demand from Asia due to higher cooling demand, the bank said. European liquefied natural gas prices recovered amid supply issues and limited availability of cargo.