(Bloomberg) — Industrial metals from copper to aluminum erased losses as uncertainty swirled surrounding the scope of President Donald Trump’s tariffs on China, Canada and Mexico, and the implications for global economic growth.
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Trump announced a 10% levy on imports from China on Saturday, as well as 25% tariffs on Canada and Mexico. China’s commerce ministry vowed “corresponding countermeasures,” without elaborating, and also said it would file a complaint at the World Trade Organization.
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Aluminum initially lost more than 1.6% on the London Metal Exchange before rebounding to edge upward as trading got underway in the US. Copper also erased losses, signaling hesitancy among investors ahead of the planned imposition of the tariffs on Tuesday.
The turnaround in industrial metals came after the dollar pushed lower following news that Mexican President Claudia Sheinbaum said US tariffs against Mexico will be delayed for one month after a conversation with Donald Trump on Monday. A weak US dollar makes metals more appealing from investors holding other currencies as they’re priced in the greenback.
While the measures are broadly expected to dent economic growth and fuel inflation, the scope of the tariffs remained unclear, as analysts questioned whether metals including aluminum, nickel and zinc would be levied at the lower 10% tariff rate applicable to energy resources due to their status as critical minerals.
“Macro concerns may dominate metals price action initially, but metals-specific factors matter too,” Morgan Stanley analysts led by Amy Gower said in an emailed note. A lower tariff on aluminum could “alleviate some concerns that Canadian metal could flood other regions, easing pressure on the European market and the LME contract.”
Aluminum is likely to be the most heavily disrupted commodity, as Canada accounted for 69% of US imports in 2023, George Heppel, an analyst at BMO Capital Markets, said in an emailed note.
“We expect this announcement to drive further volatility of US commodity exchanges as investors try to price in the risk of Trump further honoring his commitment to universal tariffs,” he wrote. “Heightened disruption will also be seen in the aluminum market, with US premiums likely to spike until Canadian producers and US consumers alike can reroute supply chains to avoid the new duties.”
