JSW Steel, Vedanta, Tata Steel and other metal stocks drop up to 2% as Trump doubles tariffs to 50%

Mint

02-06-2025

Indian metal stocks started June on a sombre note, with the Nifty Metal index declining 1.6% in early trade on Monday, June 2. Fourteen out of fifteen constituents opened in the red, trading with cuts of up to 2%. Lloyds Metals & Energy, JSW Steel, Welspun Corp, Vedanta, Tata Steel and Steel Authority of India emerged as the top laggards.
While it's not just metal counters facing selling pressure on Dalal Street today, the red wave swept across the board as global trade tensions resurfaced, triggering risk-off sentiment among investors. US President Donald Trump last week intensified trade tensions, announcing he would double tariffs on steel and aluminum imports and accusing China of violating a prior agreement to ease tariffs.
Speaking at a rally in Pennsylvania, Trump said the US would raise steel tariffs from 25% to 50% starting next week while highlighting the partnership between Japan's Nippon Steel and US Steel.
Later, taking to his Truth Social account, Trump wrote, 'It is my great honor to raise the tariffs on steel and aluminium from 25% to 50%, effective Wednesday, June 4th. Our steel and aluminum industries are coming back like never before. This will be yet another BIG jolt of great news for our wonderful steel and aluminum workers. MAKE AMERICA GREAT AGAIN!'
The announcement comes amid an ongoing legal battle over the legality of some of Trump's tariff policies. An appeals court has allowed the case to proceed after the Court of International Trade ordered a halt to the taxes.
Trump accused China of violating a tariff truce reached in early May—a claim Beijing rejected, countering with accusations of US wrongdoing. China, the world's largest steel producer and exporter, has seen its steel exports to the US decline significantly since the 25% tariff was imposed in 2018.
While India's exports of steel and aluminium to the US are limited, the drop in metal stocks occurred amid growing concerns that a potential rise in tariffs could impact global metal demand.
A call between Trump and Chinese President Xi Jinping is expected later this week in a possible effort to ease trade tensions. On the economic front, Chinese factory activity data contracted at a slower pace in May than the month prior, also aiding the selling pressure in metal stocks today.
As tariff headlines once again dominate global markets, Asian indices opened in the red on Monday, with the Nifty 50 and Sensex falling nearly 1% in early trade. Rising geopolitical tensions between Ukraine and Russia also pushed investors toward safe-haven assets, leading to a sharp decline in equities.
According to Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the market structure currently supports a continuation of the ongoing consolidation phase. He noted that global headwinds—particularly renewed tariff concerns—are likely to restrain any breakout rally. However, strong domestic tailwinds may offer support at lower levels.
He added that the recent announcement of 50% tariffs on steel and aluminium by President Trump signals ongoing uncertainty in the global trade environment, which may act as a significant headwind for markets. On the domestic front, however, factors such as better-than-expected Q4 GDP growth at 7.4%, improving trends in consumption and capital expenditure, low inflation, and the prospect of continued rate cuts present a solid foundation for sustained economic growth in FY26.
The only near-term challenge, he pointed out, is weak earnings growth. If leading indicators begin to reflect a recovery, the market has a strong chance of breaking out of its current range and moving higher.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.