Metal Prices Face Risk Ing

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Metal Prices Face Risk Ing

Metal Commodities Face Downside Risk - Ing

The threat of the trade tariffs isn't something that's far away... In fact, it is already here as Donald Trump decided to impose tariffs on the neighbouring countries.

Donald Trump has since reversed the tariffs on Mexico and Canada temporarily. But we all know that it is far from over, and we will see more tariffs during the rest of his term.

Demand Of Metals To Go Down

Amidst all of this, ING analysts believe that these trade tariffs will eventually weigh on the prices of metal commodities. Most of it will come due to the US tariffs on China and China's promise to respond accordingly.

Right now, one of the major headwinds for the metals is the tariffs, without any doubt. Especially any tariffs on Canada will hit the metal markets the most. Why? Canada supplies more than 50% of its Aluminum to the USA and all of that will come under tariffs.

Canada is also a major supplier of Copper and steel to the USA. Meanwhile, the US president has made it clear that tariffs on the Copper will take a while. On the other hand, the task of putting tariffs on Steel and Aluminum won't take much time.

ING believes that tariffs will lead to higher inflation in the USA and even around the world. And we all know that this will limit the US central bank's ability to cut the rates from current levels.

combination of higher rates, geopolitical uncertainty, and higher tariffs will strengthen the US Dollar. As a result, we can expect some major headwinds to the demand for industrial metals. Tariffs will also increase domestic prices, which will ultimately lead to less demand.

If we look back at 2018, around 25% tariff was added to Steel and around 100% duty on Aluminum imports. At that time, the plan was to boost the domestic metal production in the USA.

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