But they could face reciprocal tariffs in the future, with much now depending on possible negotiations, potential retaliatory actions, as well as the broader effects on global growth.
The latest executive order on reciprocal tariffs also granted a reprieve to gold bullion, energy, and “other certain minerals that are not available in the United States”.
The list of those minerals was extensive, including various forms of zinc, tin, nickel, graphite, antimony, tungsten, magnesium, cobalt, gallium, germanium, vanadium and silicon.
The tariffs were well-flagged in advance and should not have come as a complete surprise. US President Donald Trump had long talked about a 10% universal tariff on all goods imported into the country, which he said would raise billions to reduce the deficit and allow the government to pay for social and industrial programs.
The sheer scale of the reciprocal tariffs was perhaps unexpected, however, with some countries, particularly in Asia, facing charges in excess of 40%.
Steel and aluminium aren’t exactly untouched. Imports of steel and aluminium into the United States are already subject to 25% Section 232 tariffs, while copper is the focus of its own Section 232 investigation that could result in tariffs down the line, the White House has said.
The Dow Jones Industrial Average fell by over 1,600 points on Thursday April 3 in response to the tariffs, registering its fifth worst decline in history.
In the past, a negative performance by the US stock market had been a disciplinary force on President Trump. Now that seems to be less of a concern, replaced by a belief that short-term pain from tariffs – including inflation and potentially even a recession, arguably a long-term impact – will be offset by the benefits of reshoring manufacturing, tax cuts, and deregulation.
The 10% universal tariffs will take effect on April 5, followed by the reciprocal duties on April 9.
It gives other nations the chance to negotiate or retaliate; the EU and China have so far said they would take countermeasures, while other nations like Australia have said they will not. President Trump has already suggested that he would cut tariffs on China if it sold social media platform TikTok, for instance.
There’s also the risk that retaliation will result in a further hike in US tariffs, escalating the situation further.
China
All eyes are now on China, whose modus operandi to date has not been to impose tariffs or duties, but instead to restrict exports of critical minerals on which the US depends.
This potentially gives it significant leverage in what follows in the coming days and weeks, given it dominates the production of rare earths, gallium, germanium and antimony.
China will now be faced with an average import tariff rate of at least 54%, and possibly higher. That comprises a reciprocal tariff of 34% and a 20% tariff related to fentanyl; it could rise further depending on whether previous countervailing, antidumping and Section 301 tariffs are included, along with taxes on goods now excluded from the de-minimis clause.
Routes through which China had typically diverted trade, like Mexico and Vietnam, will diminish because there are higher US import tariffs on those countries too. If global growth in the rest of the world slows as a result of the US reciprocal tariffs, as many economists expect it to, then Chinese exports more broadly are in trouble.
More than 24 hours after the tariffs, China has yet to retaliate. However, Beijing had previously advocated for the reciprocal tariffs to be dropped and warned the US it would respond with countermeasures if it went ahead with its plans.
Perhaps more interestingly, it also embarked on a charm-offensive with other nations, including the EU and neighboring Asian countries.
That included a meeting with Japan and South Korea in Seoul on March 30, a revival of the grouping’s Trilateral Economic and Trade Minister’s Meeting last held in 2019.
The outcome was a commitment to the multilateral trading system, a commitment to speed up a joint free trade agreement and plans to cooperate on supply chains as well as sustainability and digital initiatives.
Most importantly, this reorientation of relationships is a sign that the tariffs have the potential to upend longstanding global trade and geopolitical alliances. If companies lose access to the US market, then they will inevitably look for markets elsewhere, raising the prospect of dumping material as well.
Japan has subsequently been hit with a 24% reciprocal tariff rate while for South Korea, the rate is 25%.
Uncertainty
If commodities are somewhat unscathed from the reciprocal tariffs, at least to date, they still must navigate the uncertainty the situation has created.
As the copper market has shown in the past couple of months, even the prospect of tariffs can lead to huge trade diversions in an attempt to beat the extra costs of shipping material into the US.
This is the biggest shock to global markets since the Covid-19 pandemic, and even that was a once-in-a-century event.
But there some similarities to the present day. Similar to during the pandemic, executives at metals and mining firms outside the United States say the ricocheting effects of the tariffs could impact capital expenditure plans, mergers & acquisitions activity, and their trading relationships.
With the rules of the game out of their control, it puts them on the backfoot, with a preference to wait it out until there is better clarity of the playing field.
In Hotter Commodities, special correspondent Andrea Hotter covers some of the biggest stories impacting the natural resources sector. Read more coverage on our dedicated Hotter Commodities page here.
