Vedanta Shares Lead Metal Stock Drop After Trump Tariffs

The Nifty Metal index saw significant losses on Monday, dropping over 2%, with all 15 stocks in the index losing value.

Vedanta Leads the Losses

Vedanta shares emerged as the top loser in the Metal index, falling by more than 5%. National Aluminium Co. followed closely with a 5% loss.

Tariffs Hit Global Commodity Prices

The drop in metal stocks came after US President Donald Trump announced tariffs on China, Canada, and Mexico. The tariffs, aimed at addressing trade imbalances, caused concerns about a potential trade war, which could harm global economic growth.

Copper, steel, and zinc prices fell by 1% to 3% on the London Metal Exchange (LME) following the announcement.

Details of the Tariffs

Trump revealed a 10% tariff on imports from China and 25% on goods from Canada and Mexico, effective from Tuesday. This caused the US dollar to strengthen by 1.2%, making metals more expensive for other buyers.

Global Trade Impact

The US is a major importer of copper, aluminium, and zinc. In response, China’s commerce ministry promised to take countermeasures, including filing a complaint with the WTO (World Trade Organisation).

A potential global trade war could lead to inflation, higher interest rates, and slow global growth, affecting the demand for metals. Countries may also restrict exports of critical minerals.

China’s Role in the Market

China, the world’s largest consumer of metals, is still struggling to recover fully from the effects of COVID-19. However, it is expected to increase efforts to stimulate economic growth, which may impact commodity demand.

Currently, the Nifty Metal index is down 3.13%, with Vedanta, NALCO, NMDC, SAIL, and Hindustan Copper seeing losses between 4% to 6%.

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