Trump tariffs: Trump pumps up tariff talk, dents Indian metal stocks

Mumbai: Shares of Indian metal companies tumbled on Monday mirroring the declines in their Asian and European peers after US President Donald Trump said he would impose a 25% tariff on top of the existing levies on steel and aluminium imports in the US.

NSE’s Metal index fell 2.64% on Monday, while the Nifty declined 0.8% – extending losses to the fourth straight trading session. National Aluminium was the top loser on the index, down 4.9%, whereas Steel Authority of India (SAIL), Vedanta, and NMDC declined over 4% each.

“Indian metal companies like Hindalco, JSW Steel, Jindal Steel, and Tata Steel, among others, have export exposure in their portfolios, and metals being a globally interlinked sector, is likely to get impacted by the imposition of fresh tariffs in the US,” said Arijit Malakar, equity research analyst at Ashika Stock Broking. “The US and China remain the top consumers of metals in the world and any tariff will have a ripple effect on metal companies globally.”

Analysts said it’s the uncertainty that will weigh down the share prices than the actual impact as India is not one of the top metal exporters to the US.

The largest sources of US steel imports are Brazil, Canada and Mexico, South Korea and Vietnam, while Canada accounted for 79% of the US primary aluminium imports in the first 11 months of 2024, according to Reuters.

“Domestic steel mills do not have a major export portfolio to the US (less than 100k tonnes), and should not see a major impact of Trump’s tariffs on steel imports to the US,” said Parthiv Jhonsa, lead analyst – metals & mining, Anand Rathi Institutional Equities. “While directly we may not be impacted, some global capacities, especially from Vietnam and Japan may turn to India, and their exports may continue as long as Indian steel prices are above 5% premium to these imports.”Jhonsa said Indian companies have requested a safeguard duty against steel import to India, which may benefit local producers if the duty is implemented.Monday’s sell-off in shares of metal companies was more due to sentimental reasons, said Divyam Mour, research analyst at Samco Securities.

“We see minimal impact of Trump’s tariffs on Indian companies because both steel and aluminium exports from India are under 5% of their total production,” he said.

“Out of the total steel exports, Europe constitutes 55% of it, so impact of American tariff would be very little.”

The Nifty Metal index has declined 8.2% in the last six months, whereas the benchmark Nifty 50 is down 4% in this period. The indices are down 3.25% and 1.5% in 2025, respectively.

WHAT SHOULD INVESTORS DO?
Jhonsa of Anand Rathi said companies that largely cater to domestic growth stories will do well. He is bullish on JSW Steel and Lloyds Metals and Energy and Hindalco in the non-ferrous sector. Mour likes SAIL and Tata Steel in this sector. Malakar suggests investors stay away from these stocks until there is a decisive start in capex revival in the country.

“Our outlook of this sector remains cautious as the demand is tepid and we see the global economy slowing down. While no major capex boost was provided domestically in the budget, fresh tariffs will dampen the global demand too,” said Malakar