March 20, 2018 / 11:26 AM / a month ago

Rio Tinto fears impact of trade war concerns despite tariff exemptions

MELBOURNE (Reuters) - Global miner Rio Tinto sees fears of a trade war between the United States and China weighing on its shares, even after the company won an exemption from U.S. tariffs for its Canadian aluminum exports.

FILE PHOTO - Rio Tinto CEO Jean-Sebastien Jacques poses for a photograph prior to the company releasing its 2017 full year results, in London, Britain, February 7, 2018. REUTERS/Peter Nicholls

Nearly a third of all aluminum consumed by the United States is supplied by Rio Tinto from Canada.

Canada escaped the 25 percent duty on steel and 10 percent on aluminum signed into law by U.S. President Donald Trump this month, but Rio Tinto Chief Executive Jean-Sébastien Jacques fears the impact of a broader trade war.

The real issue now is the “ripple effect” of what other countries are going to do in retaliation against the U.S. tariffs, Jacques said.

FILE PHOTO - The Rio Tinto's company logo is featured on a TV monitor at the mining company' annual general meeting in Sydney, Australia, May 4, 2017. REUTERS/Jason Reed

“That’s the one that really really concerns me,” he said at a business event in Melbourne.

“The biggest concern that everybody has is a big trade war between China and the U.S. And we just hope that common sense will prevail.”

Jacques said Rio Tinto’s share price was a good proxy for the market’s views. Its share price fell when the tariffs were first announced, but failed to recover when the exemption was granted for Canada, even though that had been the main risk for the company.

“So the markets are very nervous about it,” Jacques said, referring to a potential U.S.-China trade war.

Reporting by Melanie Burton; Editing by Susan Fenton

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