Fitch Ratings issued a stark warning on Tuesday regarding the potential impact of President-elect Donald Trump's proposed tariffs on global trade. The agency highlighted the risks to commodity markets, particularly base metals, chemicals, and oil, due to reduced demand from China, the world's largest consumer of commodities.

While China's stimulus package might alleviate some pressure, the introduction of new tariffs, especially on steel and aluminum, could lead to wider price gaps and disrupt trade flows. This, in turn, could heighten market volatility and create regional price disparities.

In the energy sector, Fitch noted that retaliatory Chinese tariffs are unlikely to significantly affect energy markets, as China accounts for around 10% of US oil exports. However, a stricter US stance on Iran could potentially disrupt the Iranian oil supply, although this might be offset by OPEC+'s spare capacity.

Trump has previously threatened significant tariffs if he returns to office, targeting BRICS nations and imposing up to 25% tariffs on Mexico and Canada, along with 10% on China. Mexico has indicated it would retaliate "in kind."