Metal Stocks Fall: As Trump Tariffs Threaten Global Commodities

Vedanta has emerged as the leading loser on the Metal Index, following declines in shares of NALCO and NMDC. This drop in stock prices comes in the wake of U.S. President Donald Trump imposing tariffs on imports from China, Canada, and Mexico, which raises the specter of a trade war that could hinder global economic growth.

On the London Metal Exchange (LME), prices for copper, steel, and zinc have fallen between 1% and 3% following the announcement of these tariffs.

Trump has introduced a 10% levy on Chinese imports, along with a hefty 25% tariff on goods from Canada and Mexico, set to take effect on Tuesday. The strengthening of the dollar, which rose by as much as 1.2%, also puts pressure on metals, as a more expensive U.S. currency makes them costlier for most international buyers.

Meanwhile, China, the largest consumer of various metals, is still grappling with the challenge of reviving its economy, which has yet to fully bounce back from the impacts of COVID-19. However, it is expected to implement measures aimed at stimulating economic growth.

According to Jefferies analyst Christopher LaFemina, "The impact of tariffs on commodity prices depends on several factors, the most important of which is how it affects the economies of China and other emerging markets."

"The one market that is likely to benefit is US steel, as more expensive imports should support higher domestic prices," he added.