Base Metals Decline Amidst Trump's Tariff Threat
Metal prices fell after U.S. President Donald Trump threatened to impose tariffs on Mexico and Canada, dampening market sentiment despite refraining from levies on China.
Tariff Fears and Global Trade Conflict
Trump announced the possibility of 25% import tariffs on goods from Mexico and Canada, strengthening the dollar and raising metal prices for consumers. Concerns over renewed global trade disputes and China's economic struggles have weighed on metal prices in recent months, with copper declining 11% in the previous quarter.
Trump's Stance on China
While Trump's cautious approach towards China initially provided some relief, traders remain uncertain about his long-term policies towards Beijing. "Tariffs on China are still a possibility, even if they're not implemented immediately," said Jia Zheng, head of trading at Shanghai Soochow Jiuying Investment Management Co.
China Outlook and Market Cautiousness
Traders approach the Lunar New Year holiday in China with caution, along with the upcoming Federal Reserve policy meeting.
Metals Market Movement
On the London Metal Exchange, lead dropped almost 1%, while aluminum declined 0.5% to $2,677.50 a ton. Zinc fell 0.4%. However, iron ore, a steelmaking ingredient closely tied to Chinese demand, rallied. Futures rose 1.3% to $105.15, the highest since December 17.