On January 3, as global trade tensions escalated following the announcement of US tariffs, Indian metal equities saw a sharp fall. All of the Nifty Metal index components lost value, although SAIL, JSW Steel, Hindustan Copper, and National Aluminium suffered the most, as the index dropped 3.6% to a low of 8,000.
Monday, February 3, saw heavy selling pressure on Indian metal stocks as US President Donald Trump imposed broad tariffs on trading partners, including China, thus intensifying the global trade war.
During intraday trading, the Nifty Metal index fell 3.6%, reaching its lowest point of the day at 8,000. With 2% to 5.4% losses, SAIL, JSW Steel, Hindustan Copper, and National Aluminium were the top losers among the fifteen index members who saw negative trading.
On Saturday, the Trump administration declared that imports from Canada and Mexico will be subject to a 25% duty. Starting Tuesday, a 10% additional tax will be applied on Chinese imports, which are already subject to several charges. With fentanyl and illegal immigrants flooding the country, Trump has declared a national emergency, which this action attempts to solve.
The two biggest trade partners of the United States, Canada and Mexico, promptly threatened retaliation penalties. Ottawa announced a 25% counter-tariff on U.S. imports, Mexico promised similar measures, and Beijing released a statement promising “corresponding countermeasures.”
The Trump administration has repeatedly warned Canada that retaliatory tariffs would compel the United States to step up its steps, raising the possibility of an uncontrollable trade war, according to a source familiar with the situation.
Trump has indicated that Saturday’s move may be the beginning of many more trade disputes and has frequently stated his preference for tariffs. Trump has formally started a global trade war by enacting the tariffs, which analysts warn might cause supply shortages and increase inflation.
A global trade war might hinder the worldwide economy and the demand for metals, increase inflation, and keep interest rates higher for longer. Additionally, it can result in countries limiting the export of vital minerals.
According to reports, Trump will slap taxes on European goods and China this week. Additionally, he said that if BRICS countries, including India, maintained their de-dollarization efforts, they would be subject to a 100% tariff increase.
In today’s trading, the tariff announcement caused base metal prices on the London Metal Exchange to plummet. On the (LME), three-month copper fell 1.3% to 8,927.5 a metric ton, while LME aluminum fell 1.5% to $2,556, the lowest level in almost two weeks.
LME zinc dropped 1% to $2,713.5, while nickel fell 0.5% to $15,130. About half of the world’s base metal production comes from China, whose economy largely depends on the real estate industry, which experienced severe difficulties following COVID-19.
The Chinese economy recovered in 2024 due to the monetary and fiscal policies put in place by the second-largest economy in the world to stimulate the real estate industry. These policies included lowering interest rates and standardizing the minimum down payment for house loans.
Experts think China should prioritize more stimulus measures to assist its economic engine after the US imposed fresh tariffs. Citing trade imbalances, the Trump administration placed heavy taxes on Beijing during his first term.
