Aluminium prices took a hit on January 22 after US President Donald Trump announced his administration was contemplating a 10% tariff on Chinese imports, effective February 1. The potential move, part of ongoing trade tensions between the US and China, sparked concerns about the possibility of a global trade war, sending shivers through markets, as reported by Reuters.

In Asia, India and South Korea are two of the world's leading purchasers of scrap and waste aluminium with China and India among the leading manufacturers of aluminium products.

At 1114 GMT, three-month aluminium on the London Metal Exchange (LME) was down 0.9%, trading at $2,622.50 per metric tonne. Copper followed suit, dipping 0.3% to $9,252. Trump’s announcement added fuel to market anxiety, especially as it came on the heels of his earlier statements suggesting similar tariffs on goods from Mexico and Canada, as well as unspecified levies on European imports.

This development raises fears that an all-out trade war could negatively affect global economic growth, particularly by dampening demand for industrial metals. Ole Hansen, head of commodity strategy at Saxo Bank, noted that the short-term market sentiment would hinge on the specifics of the tariff plans and China’s response. The longer-term consequences, Hansen explained, would be clearer once these dynamics unfold.

Meanwhile, China’s foreign ministry expressed its willingness to engage in discussions with the US to manage differences and expand mutually beneficial cooperation. However, traders remain cautious as they await further clarity on how much of the rhetoric from Washington will translate into tangible policy actions.

While the market remains on edge, Trump's recent signing of a trade memorandum on January 20 provides a glimmer of hope that there may be a more measured approach. The memorandum instructs federal agencies to conduct a comprehensive review of various trade issues, with a deadline set for April 1. This suggests that not all the threats made so far will necessarily materialise.

In other metals, LME tin rose by 0.2% to $30,265, while nickel saw a sharp 1.8% decline, dropping to $15,790. Lead gained 0.5% to $1,981, and zinc was down 0.8% at $2,889, reflecting the broader volatility in global metal markets.