Indian Metal Shares in Focus as US Slaps 50% Import Duty

US President Donald Trump's latest decision to sharply raise tariffs on steel and aluminium imports has put metal stocks into sharp focus. The announcement, made on Friday, May 30, suggests doubling the tariff on imports of steel to an enormous 50%. This drastic increase, aimed at protecting the US domestic industry, will be implemented from June 4.

The suggested tariff hikes come under Section 232 of the US Trade Expansion Act of 1962, a clause allowing the President to impose trade restrictions if imports are considered to be detrimental to national security. Mr Trump had earlier invoked this power back in 2018, imposing a 25% tariff on steel and a 10% tariff on imports of aluminium. The aluminium tariff was later increased to 25% in February 2025.

Possible Implications for India

For Indian exporters, the impact of this tariff increase seems immediate. The US is among the leading markets for Indian steel producers, which have been gradually expanding their market share through a mix of high-quality output and competitive pricing.

During the fiscal year 2024-25, India's overall exports of iron, steel, and aluminium products to the US totalled ₹380.5 billion ($4.56 billion). The amount covers ₹48.9 billion ($587.5 million) in iron and steel, a considerable ₹259.2 billion ($3.1 billion) in articles of iron or steel, and ₹71.8 billion ($860 million) in aluminium and similar articles. Experts opine that the levy will hit Indian exporters of value-added and finished steel products and auto parts the most.

Industry Reaction and Market Movement

The potential tariff hikes, senior executives in India’s steel industry have emphasised the need for caution, warning of an increased risk of trade diversion toward the Indian market.

Industry leaders such as JSW Steel and AMNS India have underscored the need for proactive action on required trade measures, commenting that nations all over the world are taking active steps to guard their domestic industries.

The market quickly responded to the news with a shift in sentiment.. The NIFTY Metal index felt the decline, plummeting 1.69% on the day the news came out. On a somewhat wider horizon, the sector fell 1.62% in the last five trading days. This latest decline is, however, to be measured against better performance in the medium term, with the NIFTY Metal index rising more than 8% in the month and 6.4% year to date.

Several individual metal stocks witnessed sharp declines. Jindal Stainless led the losses with a drop of 4.09%, followed by Vedanta, which fell 3.35%. Hindalco Industries declined by 2.51%, while Jindal Steel and Power slipped 2.46%. Hindustan Copper also registered a decline, ending the session down by 1.72%. The overall bearish sentiment reflected investor concern over potential trade implications.

Stocks of major metal companies like JSW Steel, Tata Steel, Jindal Steel, and SAIL were particularly marked to be in the limelight , after the US President's announcement.

The incident highlights the volatility of world metal markets with respect to protectionist trade policies and the importance for Indian manufacturers as well as policymakers to pay close attention to events and possible realignments in trade flows.

Disclaimer: This news is solely for educational purposes. The securities/investments quoted here are not recommendatory.

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