Iron ore prices and most base metals saw a significant decline following comments from U.S. President Donald Trump, who warned of imposing a 10% tariff on all imports from China, potentially starting as early as next month. The threat, issued in response to China’s alleged role in sending the drug fentanyl to North America, sparked fears of economic disruption, particularly in global commodities markets.

Following Trump’s announcement, Singapore iron ore futures fell as much as 1.3%, reflecting market unease over the potential impact of new tariffs. Although the U.S. is not a major importer of Chinese steel, the broader repercussions of the tariffs could weigh on the domestic market and dampen prospects for an economic recovery. This tariff threat comes at a time when iron ore prices are already under pressure, having dropped by over 25% in 2024 due to a combination of factors, including weak demand from China, whose economic troubles and real estate sector crisis have dampened its need for raw materials. At the same time, increased production from major mining countries like Australia and Brazil has added to global supply.

In 2024, the market for iron ore was significantly impacted by these factors, but in 2025, prices have shown a modest rebound, with a 3% increase so far this year. This uptick is largely attributed to improved economic signals from China, along with growing expectations that Beijing could roll out additional stimulus measures to support its struggling economy. However, Trump’s latest tariff threat has once again added uncertainty to the market.

This development comes just a day after Trump announced that tariffs of up to 25% could be imposed on imports from Mexico and Canada, further heightening tensions in global trade. These new threats triggered a sharp drop in prices of base metals, with copper on the London Metal Exchange (LME) falling 0.5% to $9,235 per ton, marking a decline from its highest close in more than two months. Similarly, aluminium, nickel, and zinc all saw price drops in the wake of the tariff discussions.

Iron ore futures in Singapore were priced at $103.95 per ton at 11:34 a.m. London time, reflecting a 0.8% decrease. Additionally, prices of steel in Shanghai and yuan-priced contracts in Dalian also fell, further signalling the widespread impact of the tariff threat on global commodities.

The market’s reaction underscores the sensitivity of commodity prices to trade policy changes, particularly in industries like iron ore, where China remains the dominant consumer. While some optimistic signs from China’s economy have provided support for prices, Trump’s tariff threats could reverse these gains, adding volatility to an already uncertain market landscape.