Metals Drop as Trump Imposes Tariffs, Threatening Global Trade
Iron ore and aluminum led a decline in metals markets after President Donald Trump imposed tariffs on China, Canada, and Mexico. The move has raised concerns of a trade war that could stifle global economic growth.
Steelmaking staple iron ore dropped 3.5% in Singapore, while aluminum fell 1.5% on the London Metal Exchange. Trump announced a 10% levy on Chinese imports and 25% tariffs on Canadian and Mexican goods.
The impact on the dollar, which rose by 1.2%, also weighed on metals prices. A stronger US currency makes metals more expensive for buyers.
China's commerce ministry threatened "corresponding countermeasures" and said it would file a complaint with the World Trade Organization. The country is currently closed for Lunar New Year holidays.
A global trade war could lead to inflation, higher interest rates, and hamper global growth and metals demand. It could also prompt nations to restrict exports of critical minerals.
China is the world's largest consumer of metals and is facing challenges in reviving its economy after the COVID-19 pandemic.
Iron ore traded at $103.75 per ton in Singapore, down 1.8% after last week's 0.7% rise. Aluminum fell 1.4% to $2,558 per ton on the LME. Copper declined 1.1%, and zinc lost 1%.
Chinese domestic markets will reopen on Wednesday.