Tariffs finally hit Australia

Hey Superheroes,

Trade War 2.0 continues to get global attention this week as U.S. President Trump has continued to announce an increasing number of tariffs.

Both the S&P 500 and Nasdaq are now at six-month lows. Similarly the ASX 200 is now closing in on its August 2024 low, reflecting uncertainty in sectors that look set to be affected by Trump’s tariffs (more on the below). Many of Superhero’s most traded ETFs have fallen off their peaks.  

Meanwhile, investors in gold miners and gold ETFs may be rejoicing as gold prices have once again continued their trend upwards. 

Here are your biggest stories for this week.

Trump’s Tariffs Hit Australian Exports

Trump’s latest tariff bombshell is making waves and Australian industries are feeling the pressure.

🛠️ No one’s exempt

The U.S. officially implemented a 25% tariff on all steel and aluminium exports on Wednesday, rejecting Australia’s earlier request for exemptions. According to a spokeswoman from the White House, exemptions during Trump’s first term had been “abused” by multiple countries including Australia. 

The move, driven by Trump’s “America First” policy, is aimed at protecting U.S. manufacturers.

While steel and aluminium only represent 0.2% of Australia’s total exports, it may still see a cost to key Australian exporters like BlueScope Steel and Rio Tinto.

🥩 Beef at risk

With exemptions denied, there are now concerns on Trump’s plan to implement retaliatory tariffs. 

For those unaware – U.S. beef is banned from Australia for biosecurity reasons, while Australia shipped out A$4.2 billion worth of beef to the U.S. last year.

American beef and lamb producers have reinstated complaints on the Australian meat industry, lobbying for a 21% tariff on Aussie beef and lamb imports.

We’ll just have to see what happens in the coming weeks.

🍇 Sour grapes for winemakers

Almost as proof the world is in the midst of a trade war, Trump threatened a 200% tariff on all European wine, champagne and alcohol products after the EU imposed a 50% tariff on U.S. whiskey. 

The EU’s decision came after attempts to discuss the steel and aluminium tariffs with the White House failed. 

EU’s policymakers had hoped the tariff on American whiskey would open doors to the negotiation table, but unfortunately this may have backfired instead.

Big block trade leads to big fall

Nickel Industries (ASX: NIC) saw its stock plunge to a low of A$0.54 this Tuesday – falling as much as 25% within the day – after an investor initiated a massive block trade.

🔎 Why the sell off?

Harum Energy, an Indonesian coal conglomerate, offloaded 4.2% of Nickel Industries’ float in a block trade on Tuesday, selling shares at A$0.69 each – well below the A$0.76 the miner had fetched just last Friday. 

Harum later informed Nickel Industries that the sell down was simply part of Harum’s ongoing liquidity management.

Despite the sell off, Harum still retains around 4% of Nickel Industries’ register through its associated entity, Karunia Bara Perkasa.

🏗️ Mining royalty concerns add to pressure

Adding to the market jitters, Nickel Industries on the same day flagged concerns about a proposed increase in Indonesia’s nickel mining royalties. For reference, the company’s mining operations are all based in Indonesia and are thus subject to the country’s policies.

The current 10% royalty rate on nickel ore may rise to between 14% and 19%, depending on prevailing nickel prices.

While the proposals have not been legislated, the uncertainty added another layer of risk to the sector.

💡 Overhang concerns linger

Barrenjoey analyst Richard Knights cautioned that the proposed tax hike was unlikely to be the main cause of the sell-off, stating that the bigger issue is the “overhang” – the risk that Harum Energy’s remaining stake could eventually find its way onto the market.

🔦  Some other things we’re shining the Spotlight on:

TESLA VS TRUMP: Tesla has warned that Trump’s tariffs could cause retaliatory tariffs that could significantly impact the U.S. car market, potentially forcing Tesla to raise prices or rethink its supply chain. The EV maker also requested to avoid tariffs on lithium and cobalt as these are hard to find in the domestic U.S. market. Tesla shares are currently down 37% year-to-date.

DISNEY TAKES ON FOXTEL: Disney is set to expand its sports streaming footprint, bringing in the NBA, Major League Baseball, NHL and UFC to Australian TV from 26 March. And similar to major rivals Netflix, Amazon and Binge, Disney+ may soon be introducing a lower-tier subscription option. 

RIO NEEDS SOME FUNDS: Rio Tinto plans to raise US$9B through bond offerings to fund its recent purchase of Arcadium Lithium. 

Keep up to date on the markets by following us on Instagram @superheroau.