Trade Tensions Are Already Hitting Industrial-Metal Prices

The prices of industrial metals, oil and other commodities have risen significantly since the Chinese manufacturing recession ended in June 2016. But many have fallen from their highs in January 2018, first in reaction to the risk of higher interest rates and now, more critically, because of trade tensions and the potential for global manufacturing and growth to be slower than expected.

The potential for slower growth due to U.S. and reciprocal tariffs was highlighted by the International Monetary Fund in early March. In addition, the March Chinese Caixin and U.S. ISM manufacturing data showed sharp decelerations -- and that was before the announcement on Sunday that Chinese tariffs on 128 U.S. goods would take effect Monday. The potential for tariffs to slow growth was confirmed on Monday as U.S. stocks experienced one of their worst selloffs of the year.