Trump’s 25% tariffs on steel shake global markets; metal stocks under pressure

In a move that has reignited trade war fears, former US President Donald Trump has announced a 25 per cent tariff on all steel and aluminium imports. The decision has sent shockwaves through global markets, particularly impacting emerging economies like India, China, and Thailand.

While India is not a top exporter of steel to the US, the imposition of higher tariffs is expected to trigger reciprocal duties from affected nations.

Analysts suggest that emerging Asian economies could face harsher trade retaliation compared to developed Asian countries like Korea and Singapore, which benefit from Free Trade Agreements (FTAs) with the US.

How will India be impacted?

The Indian steel industry is already grappling with sluggish global demand and an influx of cheaper steel imports, particularly from China. With the latest tariff hike, domestic steel manufacturers now face additional pressure, further exacerbating their financial struggles. In the recently concluded Q3 results, Tata Steel and Jindal Steel & Power Ltd saw nearly a 50 per cent drop in net profits, highlighting the fragile state of the industry.

Stock market reaction: Metal stocks bleed

The Nifty Metal index has nosedived nearly 3 per cent in the last two trading sessions, reflecting investor concerns over the tariff decision. On Tuesday, major steel stocks saw a sharp decline:

• SAIL shares plunged over 2.9 per cent on the NSE.
• Tata Steel and Jindal Steel & Power remained highly volatile, slipping into the red.

The fear of further disruptions in the global steel supply chain has driven panic selling in metal stocks, with traders adopting a risk-off approach amid escalating trade tensions.

Broader implications: Trade war 2.0?

Trump’s latest move is being seen as a signal of more aggressive trade policies ahead, particularly if he secures a second term. Experts fear that this could lead to a broader escalation in protectionist measures, potentially harming global economic recovery.

“This is just the beginning,” Trump said, hinting at further trade restrictions. While the US aims to strengthen its domestic steel industry, emerging economies could suffer the most, given their reliance on exports.

What’s next for metal stocks?

Market analysts warn that continued volatility is likely in the coming weeks as global investors assess the long-term impact of these tariffs. While the Indian steel sector remains resilient in the long run, short-term pain seems inevitable, with further downside risks looming large.

For investors, this is a wait-and-watch scenario as geopolitical uncertainties and economic policy shifts continue to dictate market trends.