KEY POINTS
- Trump’s return sends the dollar soaring, weighing on copper.
- U.S.-China trade tensions are likely to impact metals demand.
- Steel prices surge as tariff concerns rise for imports.
As Donald Trump took back the White House on Wednesday, copper prices fell sharply, and commodities were negatively impacted by the rising dollar. The possible effects of Trump’s trade, economic, and geopolitical policies, which might alter important markets for metals and other raw resources, caused traders to respond.
Strong dollar pressures metals, impacting global markets
Due to a knock-on impact on international markets, the red metal experienced its largest one-day decline since May. The dollar saw its biggest one-day increase since 2020 as a result of Trump’s victory, which put pressure on commodities priced in dollars, such as copper, by raising their cost for foreign purchasers. Following sharp declines in the Chinese yuan, copper fell as much as 4.3% on the London Metal Exchange (LME) during a widespread selloff. China is the world’s biggest consumer of commodities and a major source of demand for industrial metals like copper, thus the depreciation of the yuan increased the pressure.
Mining.com stated that early in the morning, copper fell 4.6% on the New York Comex to $9,389 per tonne. In addition to currency fluctuations, traders’ worries about future demand and the possibility that Trump’s government may rekindle trade disputes with China also contributed to the decline. Trump has already supported imposing taxes on Chinese goods, and he may do so again, which might restrict commerce between the United States and China. According to Ole Hansen, head of commodity strategy at Saxo Bank, “this scenario could lead to new tariffs on imports, particularly from China, sparking further trade tensions and economic disruptions.”
Steel prices jump, copper sinks amid uncertainty
The steel market saw its biggest intraday increase since March 2020, with a barometer of steel firm equities rising by as high as 12%. Investors believe that Trump’s return could result in the reinstatement of steel import tariffs, which were a key priority during his first term in office. To safeguard American industry, Trump had already levied a 25% steel tariff, which had a big effect on the world’s steel trade.Â
According to mining.com, investors are also keeping an eye out for Beijing’s possible reactions. In order to offset any negative economic effects from restricted access to U.S. markets, China may enact stimulus measures to increase local demand. Marcus Garvey, head of commodities strategy at Macquarie, pointed out that Beijing’s response might entail major budgetary measures to boost demand for commodities like steel and copper.
Analysts are keeping a careful eye on changes in U.S.-China ties and their possible effects on the global economy, particularly in important commodity sectors, as markets adapt to Trump’s return.
