Metals pack took a beating in Monday's trade after the US President Donald Trump on Sunday said he would soon introduce 25 per cent tariffs on steel and aluminum imports into the US. This, he said, would be on top of existing metals duties. The US President also said he may announce the reciprocal tariffs on Tuesday or Wednesday. The announcement dragged not only domestic steel and aluminum players, but steelmakers across Asia.
The BSE Metals index plunged 901.54 points, or 3.12 per cent, to 28,011.44. All the 12 BSE Metals index constituents were trading in the red. Vedanta was the worst index performer, plunging 4.47 per cent to Rs 435.20. SAIL slipped 4.42 per cent to Rs 105.60. Tata Steel, JSW Steel and NALCO declined 3-3.7 per cent. Hindalco Industries and Jindal Steel were down 2.54 per cent and 2.32 per cent, respectively.
US imports about $100 billion worth steel and aluminum annually. The annual additional tariff resulting from this new tariff is likely to be around $25 billion, Reuters reported. There were worries that the US tariffs would results in dumping of excess, unsold, goods in India and other countries.
Taimur Baig, Chief economist at DBS Bank said India has taken a pre-emptive and constructive stance in its dealing with the mercurial Trump administration. By cooperating on undocumented migrant repatriation and reducing tariff on some US goods in the latest budget, it is clearly signalling its willingness to play ball with the US, Baig said.
"Domestic and external challenges may be cause for concern, but India has a clear playbook in place, in our view," he said.
He said the US President pushing for “reciprocal tariffs” early this week, Fed Chair Jerome Powell’s semi-annual testimony to the US Senate Banking Committee on February 11, and sticky US CPI inflation data on February 12.
For Nomura, two events will be the near-term focus points in particular.
First, the Trump administration’s pause on tariffs on small packages on Friday by revising the earlier executive order. It assumes that there are no tit-for-tat actions from the US after the February 10 deadline when Chinese tariffs on US take effect. Second, in US trading hours on Friday, Trump also announced that he would put reciprocal tariffs on many countries, Nomura noted.