BUZZ-Canadian banks fall after Trump slaps sweeping tariffs

Updates

** Shares of Canadian banks fall after U.S. President Donald Trump slapped sweeping tariffs on Mexico, Canada and China, igniting a trade war that could hurt global growth

** Canadian Imperial Bank of Commerce CM.TO, Bank of Montreal BMO.TO, Scotiabank BNS.TO and Royal Bank of Canada RY.TO fall 4.5%, 2.8%, 3.6% and 1.3%, respectively

** Canada, a top U.S. trading partner, has vowed retaliatory tariffs

** Scotiabank says the first order impact of the trade war will be on Canadian bank valuations coupled with downward revisions to profit expectations for the sector

** Brokerage says even if tariffs end up being temporary, the implications of the trade war will be lingering for a long time

** Scotiabank says bank investors need to be aware of the risk that any fiscal support may come at a price for the sector, pointing towards the "Canada Recovery Dividend $(CRD.AU)$"

** The CRD was a one-time tax levied on the banks and life insurers to help support Canada's broader recovery from the COVID-19 pandemic

** Banks had been benefiting from policy easing under a soft-landing scenario, but a looming recession makes that calculus more complicated, Scotiabank says

(Reporting by Arasu Kannagi Basil in Bengaluru)

((ArasuKannagi.Basil@thomsonreuters.com;))