Caught in crossfire: Nifty Metal slumps 2.5% as Trump raises China tariffs to 104%; Lloyds Metals worst hit

Stock market today: Indian metal stocks continued to melt during Wednesday's trading session, April 9, as trade tensions between the world’s two largest economies worsened, with both sides escalating tariff threats and retaliatory measures, raising fears of spillover effects on the global economy, which is already showing signs of strain.

The Nifty Metal index fell another 2.5% at the day’s low, taking the week-to-date decline to over 8%. This adds to the 7.5% drop recorded last week. During Monday’s session, the index touched a new 52-week low, as fears of a global recession intensified amid persistent trade tensions and no signs of resolution.

As of 11:45 A.M., all 15 constituents of the index were trading in the red, with Lloyds Metals & Energy emerging as the biggest laggard, down 6%, followed by Welspun Corp, NALCO, Jindal Steel & Power, Jindal Stainless, Hindustan Zinc, Adani Enterprises, and Tata Steel, all declining between 3% and 5%.

Trade war escalates between U.S. and China

Today's sharp drop in metal stocks came after the Donald Trump administration imposed an additional 50% tariff on Chinese goods. The White House, on Tuesday, confirmed that the new tariff structure—effective April 9—follows through on Trump’s ultimatum to Beijing to roll back its retaliatory 34% matching duties on American goods.

The dramatic hike—consisting of a 20% tariff levied in March, followed by another 34% last week, and an additional 50% confirmed this week—is among the most aggressive U.S. trade actions in recent memory. With the latest 50% tariffs, the total tax on Chinese goods now stands at 104%.

The tit-for-tat trade policies have raised fears of a sharp fall in demand for copper, zinc, and other industrial metals, as both the U.S. and China together account for 45% of global GDP.  The rising trade tensions, which could potentially slow the global economy’s growth momentum, have been weighing on metal prices in recent weeks, with copper on the Shanghai Futures Exchange touching an 8-month low in today’s session.

Apart from base metals, tariff tensions have also pushed crude oil prices to a 4-year low, as demand concerns intensified following Trump’s aggressive tariffs on the world’s largest consumer of crude oil—China.

According to various reports, Trump is also considering tariffs on copper—one of the key commodities excluded from the recent round of reciprocal duties. Other metals such as zinc, nickel, and tin were also exempt from the country-specific tariffs, though they may be subject to Section 232 investigations in the future.

By exerting severe duties on China, investor concerns have grown that it may cause Beijing to lose growth momentum, just as it is gradually recovering from the COVID-19 slump. In response to Trump’s tariffs, China has already announced significant stimulus measures last month, with top officials stating they will introduce more steps to keep the economy from being less impacted.

China pledged to “fight to the end” in the growing trade conflict, signaling a potentially prolonged trade dispute. 

Trump's new tariffs take effect

Meanwhile, Trump’s punishing tariffs on dozens of economies came into force on Wednesday. Following the imposition of sweeping 10% tariffs that have rocked the global economy since going into effect over the weekend, tariff rates on imports from exporters like the European Union and Japan rose further starting today. This means U.S. consumers will now have to pay more for the same goods they purchased last month. 

Despite reports that over 70 countries, including Japan and South Korea, expressed willingness to negotiate, the lack of concrete developments weighed on investor sentiment.

Trump’s tariffs and the subsequent retaliatory actions by other nations have cast a shadow over investor portfolios. The Trump administration has remained defiant, with the U.S. president stating, “It won’t be easy,” and urging Americans to “hang tough” in a Truth Social post late Friday.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.