Trump's tariff policy boots hit Palladium Gold the hardest hit overnight

SMM3, May 5: Palladium prices have been hit hardest this week after US President Donald Trump unveiled tariff plans for steel and aluminium.

"this must have had an impact on market sentiment," Capital Economics Ltd. "tariffs add to the uncertainty," said Simona Gambarini, a commodities economist.

North American carmakers are one of the world's largest buyers of palladium. The company consumed 1.8 million ounces of palladium in 2017, accounting for 17 per cent of global palladium demand, according to Metals Focus, a research firm. Today, the auto industry in the United States is already under pressure. On Thursday, five of the six largest carmakers reported a drop in US shipments in February from a year earlier, while the carmaking sector was one of the S & P 500's biggest losers yesterday.

Palladium prices fell 5.3 per cent this week, more than any other metal.

Toyota (Toyota Motor Corp.) The Trump administration's tariff decision will raise the cost of making cars and trucks and have a "negative impact" on car companies, which are understood to plan to work with Mazda Motor Company (Mazda Motor Corp.), the company said. A joint venture to build a new $1.6 billion plant in Alabama. Separately, Rebstock, a spokesman for BMW's (BMW AG), declined to comment on the possible impact of the tariffs on the company, saying 70 per cent of the steel it uses in US carmaking is made in the US.

Macquarie Group (Macquarie Group Ltd.) Matthew Turner, a metals analyst, said: "this means that between two complementary commodities, if the price of one commodity rises, demand for the other will fall. A shift in sentiment in the US car market usually has a huge impact on palladium prices. "

However, the fall in palladium prices cannot be attributed entirely to Trump's tariffs. Some analysts said it could also be the result of a long period of bearish sentiment on palladium in recent months.

"I don't think there is a strong link between tariffs and the decline in palladium prices," Oliver Nugent, commodities strategist at (ING Groep NV), a Dutch international group, said in a telephone interview in Amsterdam. This is more likely due to the continued weakening of palladium prices in recent months and the impact of broader market shocks. "

Precious Metals Insights Ltd. Philip Klapwijk, general manager, said yesterday's sell-off could be the result of a combination of factors, including the emotional impact of the US market. Of course, the broader impact of a trade war could be a bigger driver.

"I don't think tariffs on steel and aluminum could lead to higher car prices and weigh on car sales in the United States, but that doesn't explain the recent decline in palladium prices," Klapwijk said. Tariffs could also trigger a trade war that would affect GDP growth, which in turn would affect automotive exhaust catalysts and industrial demand for palladium. "

Translated by SMM Xu Huimei from Bloomberg