(Jan 28): Copper edged lower after US President Donald Trump said he planned to impose import tariffs on the metal, as well as aluminum and steel, raising fears of trade wars and aiding the dollar.

Trump made the pledge in a speech in which he also threatened levies on computer chips and pharmaceuticals, in an attempt to boost domestic manufacturing. The Financial Times reported that Treasury Secretary Scott Bessent is pushing for universal tariffs on US imports to start at 2.5% and rise gradually, citing unnamed sources. Trump subsequently said that he wants across-the-board levies that are “much bigger” than that.

The dollar strengthened, making commodities priced in the currency more expensive for most buyers, and aluminum and iron ore also fell modestly. The lack of major reactions in metals to the tariff threats may be due to sharp losses on Monday as risk aversion swept through markets amid a rout in technology stocks, as well as Chinese markets being closed for Lunar New Year holidays.

Any import tariffs on metals are likely to hit Canada the hardest. The US’s northern neighbor accounted for just over half of its aluminum imports by value in 2023, Morgan Stanley said in a note this month. Canada was second, behind Chile, as a source of copper, and was the US’s number one foreign steel supplier, followed by Mexico and South Korea.

Industrial metals have been under pressure as traders weigh the potential for a prolonged trade conflict, which would slow global growth and hurt demand. In China, factory activity shrank in January after three months of expansion, signaling caution among domestic consumers, while its embattled property sector shows little sign of a sustained rebound.

Copper slipped 0.5% to US$9,049.50 a tonne on the London Metal Exchange as of 12:24pm in Singapore, following a 2% drop on Monday. Aluminum dipped 0.4% and zinc was down 0.9%. Iron ore futures fell 0.4% to US$103.20 a tonne in Singapore.

Uploaded by Magessan Varatharaja