Trump threatens tariffs on metals, Indian metal stocks fall

US President Donald Trump has said he will announce a 25 per cent duty on all steel and aluminum imports, a long-standing contentious category of trade for India and the US. This follows his statement on Sunday that would announce the tariffs on Monday, covering imports from all countries.

“Any steel coming into the United States is going to have a 25 per cent tariff, aluminum, too,” Trump said aboard Air Force One while flying to New Orleans for the Superbowl. He said reciprocal tariffs would also be coming for all countries.

“Very simply, if they charge us, we charge them,” he said. Those tariffs will be announced on Tuesday or Wednesday and take effect immediately, he added. The tariff threat comes ahead of Prime Minister Narendra Modi’s visit to Washington this week. India exported steel worth $4 billion and aluminum worth $1.1 billion during 2023.

Steel and aluminum trade has been a contentious — and complicated — issue for India and the US, with Washington accusing New Delhi of subsidising those exports. During PM Modi’s visit to Washington in 2023, the two countries agreed to settle six disputes before the World Trade Organisation involving the metals.

However, in October, the US slapped duties as high as 39.5 per cent on some categories of aluminium imports. It was not clear how the 25 per cent tariff Trump announced will apply to these.

In the last days of former President Joe Biden’s administration in January, the US agreed to waive additional tariffs imposed by Trump’s first administration ranging between 10 and 25 per cent, with a joint mechanism to monitor exports. In return, India agreed to reduce tariffs on apples, walnuts and almonds.

India’s total exports to the US were $87.4 billion, while imports from the US were $47.8 billion last year, with a large balance in India’s favour, according to the US Census Bureau. Trump has focused on the US trade deficits and has vowed to reverse them through tariffs. During his first term, he made the 100 per cent duty on Harley-Davidson motorcycles an example of why he considers India a “tariff king”.

India this month symbolically reduced the duties already reduced on heavier Harley-Davidson models from 50 to 30 per cent and from 50 to 40 per cent for other models. But in more substantial categories like satellite ground equipment and some scrap and waste, it scrapped duties, while reducing them in some other groups.

Meanwhile, shares of domestic metal companies on Monday declined sharply after Trump announced to impose a 25 per cent tariff on all steel and aluminium imports.

His statement raised concerns about disruptions in the global metal market and led to selling pressure on steel stocks. In response to these developments, stocks of Tata Steel, JSW Steel, and Hindalco Industries fell nearly 3 per cent, making them some of the worst performers on the Nifty 50 index.

Other companies like Vedanta and Jindal Steel also dropped by 3-4 per cent. The Nifty Metal index fell more than 2 per cent, resulting in top loser sector of the day.

The possibility of higher tariffs in the US poses a serious challenge for metal producers worldwide. If implemented, the tariffs would make foreign steel and aluminum more expensive in the US, reducing their competitiveness and impacting demand. For exporters, this could mean lower profits as the cost of selling in the US increases.

Additionally, with limited access to the US market, global metal producers might face an oversupply of steel and aluminum, which could lead to a drop in prices and a decline in earnings.

In early trade, the Sensex was trading at 77,575.91 with a decline of 284.28 points or 0.37 per cent, while the Nifty was down 87.95 points or 0.37 per cent at 23,472.00.

The Indian rupee also opened on a lower note by 53 paise to 87.95 against the US dollar on Monday.