Base Metals Decline on Trump's Mexico, Canada Tariff Threats
Base metal prices fell after U.S. President Donald Trump announced plans to impose tariffs on Mexico and Canada by February 1. The news dampened market sentiment despite Trump's decision to temporarily hold off on tariffs against China.
The move pushed the U.S. dollar higher, making metals more expensive for buyers around the world. Concerns over a renewed global trade conflict and China's slowing economy had already weighed on metal prices in recent months, with copper losing 11% in the last quarter.
Trump's cautious stance towards China provided some relief but left traders uncertain about his long-term policies towards Beijing.
"Tariffs on China still hang like a sword over the head, even if there are none on the first day," said Jia Zheng, head of trading at Shanghai Soochow Jiuying Investment Management Co.
Traders are also being cautious ahead of China's Lunar New Year holiday and the Federal Reserve's policy meeting next week.
On the London Metal Exchange, lead dropped over 1%, while aluminum fell 0.8% to $2,670 per ton. Zinc lost 0.6%.
However, iron ore, which is heavily dependent on demand in China, surged. Futures rose 1.5% to $105.35, the highest since December 17.