Trump's Trade Offensive Rattles Emerging Markets: Copper Tariffs and More

Emerging market currencies and stocks faced declines following U.S. President Trump's escalation of global trade tensions with new tariffs on copper. Trump threatened significant tariffs on various sectors, impacting emerging markets like South Africa and Chile. Financial markets prepared for more trade announcements, leading to heightened volatility.

Emerging market currencies and stocks fell on Wednesday after President Donald Trump ramped up his global trade offensive through the imposition of tariffs on copper, while signaling additional announcements were imminent.

Trump proposed a steep 50% tariff on copper imports and hinted at long-promised levies on semiconductors and pharmaceuticals, sending most emerging market currencies sliding against the U.S. dollar. The MSCI's index shed 0.1%, marking its fourth consecutive decline, nearing a two-week low.

South Africa, a major producer of minerals and precious metals, saw its currency dip by 0.3% amid relatively unchanged stock levels. Meanwhile, Chile, the world's top copper producer, opted for a cautious stance, as exports to the U.S. constitute less than 7% of Chile's refined copper trade. The nation's peso remained stable following Tuesday's announcement.

Asia and Europe saw mixed responses, with South Korean stocks nearing a four-year high due to favorable market policies, while Hungary's forint dropped ahead of its central bank's policy minutes. Investors braced for further trade-related developments as Trump's tariff rhetoric continued to provoke market volatility.

Trade experts suggest navigating Trump's negotiation tactics could mean further pressure through heightened tariffs, a strategy that caught markets off guard. In the Middle East, Turkey's lira remained stable while stocks advanced by 0.6%.

(With inputs from agencies.)