U.S. President Donald Trump announced a one-month delay on imposing 25% tariffs on imports from Canada and Mexico. The announcement sparked optimism among traders, leading to a rise in copper and zinc prices, while dragging the U.S. dollar lower. This development is seen as a respite from growing trade tensions that have rattled global markets in recent months.
President Trump’s decision to postpone the tariffs came after successful negotiations with Canada and Mexico, where both neighboring countries agreed to adopt tougher border-control measures. This concession appears to have staved off a potential continental trade war, at least temporarily.
The U.S. administration’s move provided much-needed relief to base metal markets, which have been volatile amid escalating trade war fears. Market participants welcomed the news as a sign of easing tensions between the North American trade partners.
Trump’s approach to international trade has been characterized by frequent threats of tariffs as a negotiation tactic. His decision to delay levies on Canada and Mexico comes at a time when similar threats loom over China, the world’s largest consumer of base metals.
Copper, widely considered an industrial bellwether due to its extensive use in construction and manufacturing, extended gains on Tuesday as sentiment improved following the tariff news.
On the London Metal Exchange (LME), copper traded 0.3% higher at $9,124 a ton at 9:24 a.m. in Singapore. The metal experienced significant price swings on Monday, moving within a $200 range as traders reacted to geopolitical and economic developments.
Zinc, another important base metal used in galvanizing steel, also saw gains, rising 0.3%. Meanwhile, aluminum prices steadied after previous fluctuations. Iron ore remained relatively unchanged at $104.40 a ton in Singapore.
The weakening of the U.S. dollar further supported base metals. A lower dollar makes commodities priced in the currency more attractive to global buyers, boosting demand.
Despite the positive sentiment surrounding Trump’s tariff delay, concerns about the state of demand in China continue to weigh on the market. China, the world’s largest consumer of copper and other base metals, plays a critical role in determining global commodity prices.
The ongoing Lunar New Year holiday has temporarily quieted Chinese markets, which are set to reopen on Wednesday. Analysts are closely watching for signs of renewed demand or government stimulus measures that could influence base metal prices.
The U.S.-China trade relationship remains another key factor. Trump has threatened tariffs against Beijing, but his administration has also signaled a willingness to engage in talks. Hopes for a potential reprieve have provided a glimmer of optimism for commodity markets.
Base metals have faced a turbulent start to the year, driven by geopolitical tensions and economic uncertainty. The trade-war rhetoric, combined with fears of a global economic slowdown, has led to sharp price fluctuations.
Copper, in particular, has been a barometer for market sentiment. Its price movements often reflect broader economic trends due to its widespread use in various industries. As a result, traders closely monitor developments in the trade landscape and macroeconomic indicators.
The recent price swings underscore the sensitivity of base metal markets to political and economic news. A resolution to the trade disputes involving the U.S., Canada, Mexico, and China would likely bring stability to the market, but the path to such an outcome remains uncertain.
Market analysts have expressed cautious optimism following Trump’s tariff delay. “This move by President Trump provides temporary relief to markets that have been battered by trade tensions,” said a commodities analyst at a leading investment firm. “However, the underlying issues remain unresolved, and the potential for further volatility is high.”
Another analyst noted that the weakening U.S. dollar is a significant factor supporting base metal prices. “A softer dollar makes commodities more attractive to international buyers, which is a positive development for base metals like copper and zinc.”
As Chinese markets reopen after the Lunar New Year holiday, traders will be watching for signs of renewed demand and potential policy measures from Beijing. Additionally, any developments in U.S. trade policy will continue to influence market sentiment.
The global economic outlook remains uncertain, with central banks around the world grappling with inflationary pressures and slowing growth. These factors will play a crucial role in shaping the trajectory of base metal prices in the coming months.
In the short term, the delay in tariffs on Canada and Mexico is a welcome development for commodity markets. However, the specter of trade disputes and economic uncertainty looms large, keeping traders on edge.
