Metals drop as Trump tariffs raise inflation, growth fears
Iron-ore and aluminum led metals lower after President Donald Trump imposed tariffs on China, Canada and Mexico, threatening a trade war that could sap global economic growth.
The steelmaking staple dropped as much as 3.5% in Singapore, while aluminum was down as much as 1.5% on the London Metal Exchange. Trump announced a 10% levy on imports from China, as well as 25% tariffs on Canada and Mexico. The impact on the dollar, with a gauge up by as much as 1.2%, also weighed on metals as a costlier US currency makes them more expensive for most buyers.
China’s commerce ministry vowed “corresponding countermeasures,” without elaborating, and also said it would file a complaint at the World Trade Organization. The country remains closed for its lengthy Lunar New Year holidays.
A global trade war may spur inflation, keep interest rates higher for longer, and will be a headwind for global growth and metals demand. It could also lead to nations restricting exports of critical minerals. China is the world’s largest consumer of most metals and is still struggling to revive economic growth that hasn’t fully recovered from Covid-19.
Iron ore fell 1.8% to $103.75 a ton as of 9:18 a.m. in Singapore, after rising 0.7% last week. Aluminum dropped 1.4% to $2 558 a ton on the LME. Copper was down 1.1% and zinc lost 1%.
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