Metals and mining: trade woes, growth slows

Uncertainty surrounding the US administration’s vacillating tariff policy has thrown global trade into disarray and put pressure on economic growth at a time of heightened geopolitical tension. 

At Wood Mackenzie, therefore, we have cut our global growth forecasts for this year and next, and taken an in-depth look at what slower growth, trade disruptions and other key issues are likely to mean for bulk commodities from coal to steel, with a particular emphasis on Asia.  

Fill in the form to download a complimentary copy of our slide deck and read on for a brief introduction. 

US tariffs put pressure on global growth 

The US administration’s decision to tear up the global trade rulebook has been the dominant macroeconomic theme since spring. And while we do not expect the world to slip into recession this year as a result, we do expect growth to slow. 

We have consequently cut our global growth forecast for 2025 to 2.4% from 2.8%. For 2026, we are forecasting 2.5% growth rather than 2.7%. We assume that once the pause on the US reciprocal tariffs ends on 1 August, US effective tariff rates will rise before easing gradually to around 10% by the end of next year, up from 2.5% in 2024. 

The recent trade deal between the US and Vietnam is a case in point: the US tariff on Vietnam’s exports will actually increase from the 10% rate in place during the pause period to 20% thereafter, suggesting that many other economies face a risk of higher tariffs. 

Industry will be disproportionately affected. We have shaved 90bp off our global industrial production forecast to 2.2% in 2025 and trimmed our 2026 forecast by 60bp to 2.6%. We also think higher tariffs will lead to a restructuring of global trade flows and global supply chains. 

Asia to be among the hardest hit 

The Asian economies are among the most vulnerable to full tariffs, notably Cambodia, Vietnam, Taiwan, Thailand, China and Malaysia. While many of them posted strong exports in the first five months of the year, we think this was largely driven by stockpiling rather than real demand. This stockpiling demand is likely to wane and, once exports are again driven by real demand, we believe we are likely to see softer export growth from these economies and others. 

China saw solid growth in the year to May. Exports were up 6% despite tariffs, while industrial production was up 6.3%. The country registered a stronger growth in the first half of 2025 than 2024, but there are concerns for H2 2025.  

Fiscal support for consumer-goods and auto trade-in programmes, which have been driving growth, is likely to shrink in the second half of the year and into 2026. The outlook for real estate remains poor. And year-to-date export growth has been partly due to stockpiling; May exports to the US were down 30% on the year, signalling problems ahead as trade barriers increase. Exports to the US account for 3% of China’s GDP and 7.5% of its industrial production. 

Our 2025 GDP growth forecast for China is now 4.3%, down 50 bp from our previous estimate. This may be conservative, but we think reaching the country’s 5% target will be a challenge. 

Bulk commodities in flux 

Thermal coal 

After years of crisis-driven highs, thermal coal faces a cooling market. Prices have stagnated in 2025 amid weak demand and oversupply. The slowdown in global growth could put further pressure on prices, especially if the excess supply is not curtailed. Likewise, a ramp-up in domestic coal production in China and India could suppress prices, as could a step-up in renewables and nuclear production.  

Steel 

China accounts for nearly half of global steel production and leans heavily on exports. We believe Chinese steel exports are likely to moderate this year and next amid the reignited trade tensions. While history reminds us that tariffs alone don't eliminate imports, we expect US steel imports to have fallen 15‒20% on the quarter in Q2, though imports will still meet 20‒25% of US demand in 2025.  

Iron ore 

The key theme here again is China and the headwinds the country is facing. By 2050, we estimate that China raw ore (RO) demand contract by 42%, which translates into a loss of 550 million tonnes of raw non-agglomerated ore (RNO) demand between now and 2050. The decline will be less pronounced over the next 5‒10 years and start and accelerate from 2035.  

Learn more 

To see more detailed forecasts, fill in the form at the top of the page to download our complimentary slide deck.