Trump’s Steel Tariffs Throw A Spanner Into Commodities Works

by Vanya Dragomanovich   AlphaWeek – Just as institutional investors started once again warming up towards commodities after a long period of falling prices, the decision by the US to introduce tariffs on imports of steel and aluminium is threatening to disrupt the investment flow into commodities. The tariffs, which go into effect before the end of March, have already triggered a domino effect in the heavily intertwined global commodities trade and it is far from clear where the last domino will fall. The first, albeit wrong, assumption of outsiders of the metals markets was that the tariffs would protect the US steel industry from cheap Chinese imports. But China is only number ten on the list of countries exporting steel to the US, with Canada and Brazil being in the top two slots. Similarly, Canada and Mexico are among the two of the top four exporters of aluminium into the US. Although Trump initially proposed to apply tariffs to all countries selling steel and aluminium to the US this was quickly amended to exempt Canada and Mexico. The US can’t really afford to start a serious trade war with its two neighbours as it depends too heavily on them for… continue reading

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