Rio Tinto Ltd (RIO.AU), one of the world's largest mining companies, saw its shares plunge 5.31% in intraday trading on Wednesday. The steep decline comes in the wake of U.S. President Donald Trump's announcement of a staggering 104% tariff on imports from China, sparking fears of reduced demand for iron ore and other commodities.

The tariff announcement has sent shockwaves through the Australian mining sector, with the metals and mining index dropping 3.1%. BHP, another mining giant, also suffered a 3% decline. The impact is particularly severe for Rio Tinto, given its significant exposure to the iron ore market and its reliance on Chinese demand.

Iron ore prices have tumbled to a year-to-date low of US$92.80 per tonne in Singapore, reflecting growing concerns about the Chinese economy and its construction sector. As China grapples with the economic fallout from both U.S.-imposed tariffs and its own retaliatory measures, investors fear a substantial decrease in demand for iron ore, Australia's key export commodity.

The situation is further complicated by President Trump's recent executive orders aimed at revitalizing the U.S. coal industry, which could potentially impact the growth prospects of alternative energy sources and related commodities. This double whammy has hit Australian miners hard, with some lithium producers, like Pilbara Minerals, experiencing even steeper declines of up to 6%.

As iron ore prices continue to slide, there are growing concerns about the broader implications for the Australian economy. The Australian dollar, often viewed as a proxy for Chinese economic health in forex markets, may face downward pressure. This development serves as a stark reminder of Australia's economic vulnerability to global trade tensions and fluctuations in commodity demand.