Metals and Mining ETFs: Tariff Plans Spark Volatility and Opportunity

As we navigate the complex landscape of global trade, one thing is clear: tariffs are here to stay, and they're shaking up the metals and mining sector. While the recent tariff announcements have injected volatility into the market, they've also created opportunities for investors to capitalize on the shifting dynamics. Let's take a closer look at how these tariff plans are affecting metals and mining ETFs and which ones might be better positioned to weather the storm.



The announced tariffs on metals and their potential impacts on supply chains have significantly influenced the performance of metals and mining ETFs in both the short and long term. In the short term, volatility has been the name of the game, with price swings affecting various metals and mining ETFs. For instance, copper prices jumped to $9,500/t in February 2025 due to tariff threats widening the COMEX/LME arb (Source: Copper). Meanwhile, aluminum prices held steady in Q4 2024 despite broader metal market weakness, with supply disruptions and the EU's proposed ban on Russian aluminum supporting prices (Source: Aluminium).

In the long term, tariffs can force companies to adjust their supply chains, potentially leading to increased demand for certain metals. For example, if US companies shift their aluminum production back to the US to avoid tariffs, this could boost demand for aluminum and support the performance of aluminum-focused ETFs. However, geopolitical risks and investment opportunities should also be considered. Tariffs can exacerbate geopolitical tensions, which can impact the performance of metals and mining ETFs. Additionally, tariffs can create investment opportunities in metals and mining ETFs that focus on companies with strong balance sheets and the ability to navigate challenging market conditions.



When it comes to specific metals and mining companies within these ETFs, some are likely to benefit or be negatively affected by the tariff plans. For example, Freeport-McMoRan (FCX) and Alcoa (AA) are significant producers of copper and aluminum, respectively. The proposed 25% tariff on aluminum and steel, as well as the 10% tariff on Chinese imports, could impact their operations and profitability. However, their diversified portfolios of metals may help mitigate the effects of these tariffs. On the other hand, companies like MP Materials (MP), which focuses on rare earth metals, could face both challenges and opportunities due to supply chain disruptions.

In conclusion, the tariffs and their potential consequences for metals prices and demand can significantly impact the investment thesis for each of the ETFs discussed. While tariffs can lead to increased demand for domestically produced metals, they can also increase production costs for U.S. companies. ETFs like the SPDR S&P Metals & Mining ETF (XME) and the iShares MSCI Global Metals & Mining Producers ETF (PICK) might be better positioned to weather tariff-related volatility due to their broader exposure to the metals and mining sector. However, investors should still be cautious and monitor the situation closely, as the specific impacts of tariffs on each ETF could vary depending on the details of the tariffs and the companies included in the ETFs' portfolios.