Metal stocks tumble as US President Trump announces 25% tariff on steel imports

Metal stocks declined in early trade on Monday after US President Donald Trump announced tariffs on all steel and aluminium imports entering the US.

Speaking to reporters aboard Air Force One on Sunday, Trump said that the tariffs from Monday will impose a 25% charge on all steel and aluminium imports.

Reacting to the announcement, the Nifty Metal Index dropped 2.5% lower at 9:37 am on Monday, becoming the biggest sectoral loser of the day. Meanwhile, the NIFTY 50 index was trading in the negative, down 124 points or 0.5%, at 23,436.

Notably, shares of metal companies had seen a sharp upswing last week after the first monetary policy committee (MPC) under Reserve Bank of India’s (RBI’s) new governor Sanjay Malhotra had cut the repo rate by 25 basis points to 6.25% on Friday. This was the first rate cut in five years.

A cut in the repo rate is a positive for metal stocks as lower rates are considered conducive for infrastructure and real estate that depend heavily on borrowings.

Indian metal stocks have dropped as the latest tariffs on US steel imports are a step back in the India-US agreement that was reached in January 2024 last year, when the two countries had mutually agreed on the terms for steel and aluminium trade without additional duties.

The US government has agreed to let in 3,36,000 tonnes of steel and aluminium from India with the waiver of additional duties that were imposed under a national security law by the Trump administration in 2018.

Meanwhile, in an additional warning, Trump has also announced that there would be an announcement later in the week about reciprocal tariffs on all countries that tax imports from the US. However, he did not specify the exact countries that would be targeted or exempted.