Close Menu
Invest Insider News
    Facebook X (Twitter) Instagram
    Sunday, July 6
    Facebook X (Twitter) Instagram Pinterest Vimeo
    Invest Insider News
    • Home
    • Bitcoin
    • Commodities
    • Finance
    • Investing
    • Property
    • Stock Market
    • Utilities
    Invest Insider News
    Home»Commodities»Commodities tune out of Trump’s noise to trade fundamentals
    Commodities

    Commodities tune out of Trump’s noise to trade fundamentals

    March 12, 20255 Mins Read


    Dial out the noise and focus on the fundamentals is a tactic that may work best for global commodity markets as they navigate the mounting challenges posed by U.S. President Donald Trump’s erratic and inconsistent trade policies.

    While the media focus on each headline-grabbing announcement and social media post about new and retaliatory tariffs from the U.S. leader and his administration, commodity markets are busy doing what they have done so well in the past, adapting to rapidly changing circumstances.

    For commodities it’s important to make distinctions between those already being affected by Trump’s trade policies, those likely to be in the future, and those unlikely to suffer direct impact, but which might feel second-round effects from a slowing world economy.

    The first group includes steel and aluminum, with Trump’s 25% tariffs on all imports of the metals having started.

    The main impact is likely to be price increases for steel and aluminum in the United States, as domestic producers have limited scope to boost output significantly.

    That will force consumers of the metals to pay the tariffs, and they are also likely to face increases in the cost of U.S.-sourced metals as local producers raise prices to match those of competing imports.

    Over the longer term it is possible that U.S. aluminum and steel makers will increase capacity and output, or that foreign producers will build plants in the United States.

    But whether this happens depends very much on whether companies take the view that the tariffs are largely permanent, and if the U.S. economy will be strong enough to justify making the investments.

    For countries outside the United States there may be some re-ordering of trade flows as they seek to replace metals previously sold to the United States, but a far bigger risk is the threat of a synchronized global economic slowdown as tariffs cut trade flows, boost inflation and cut competitive advantages.

    Commodities in Trump’s firing line include crude oil and copper, albeit from different perspectives.

    Trump has indicated he intends to put a tariff on copper imports, a move that is drawing copper inventories from Asia and Europe to the United States and increasing the price of U.S. copper relative to other global benchmarks.

    This a straight arbitrage play likely to wind down as soon as tariffs take effect, or not, depending on what Trump eventually decides.

    Disruption to the global copper market is likely to be limited, with the fate of China’s economy this year more of a driver, since it is the world’s biggest importer and processor of the metal.

    An example of looking at fundamentals and ignoring noise is reaction to Trump’s reported plan to build metals refining facilities on U.S. military bases as he moves to ensure a secure supply of critical minerals.

    Trump is rightly concerned about China’s control over much of the sourcing and processing of critical minerals, which include metals such as copper, lithium and cobalt, as well as minor metals such as tungsten and rare earths.

    But it is questionable whether the solution is to build refineries on military bases.

    The United States would still have to source the raw ores, often from foreign countries, and nothing Trump is doing would seem to be ensuring greater U.S. access to resources.

    Trump has effectively killed foreign aid, and with it much of his country’s soft power, and his bullying tactics and tariffs on friend and foe alike are ruining the image and reputation of the United States.

    It would be hard to find a stauncher U.S. ally than Australia, but in the wake of Trump’s tariffs on steel and aluminum, Prime Minister Anthony Albanese urged fellow citizens to buy local rather than U.S. goods.

    “Buy Bundy rather than some of the American products … You can make a difference,” Albanese said in a radio interview on Thursday, referring to the renowned domestic rum.

    Australia has major reserves of numerous critical minerals, but with Trump treating the country as a trade enemy it is increasingly difficult to see cooperation on investment in developing mines and processing.

    Crude oil is another commodity that may be affected by Trump’s policies, but more from a geopolitical view than tariffs.

    If Trump does try to use sanctions to force Iran’s crude exports to near zero, this will tighten supply and be bullish for prices.

    If he does manage to secure a peace deal in Ukraine, it is likely to be on Russia’s terms and result in an easing of sanctions, which may boost supply.

    There is also the risk that U.S. crude exports are included in retaliatory tariffs should the trade war continue to escalate, which would force a re-ordering of global flows.

    Liquefied natural gas (LNG), of which the United States is the biggest shipper, is also at risk of being sucked into trade wars, and this has already started with China’s tariffs, which are likely to end Beijing’s purchases of U.S. cargoes.

    One commodity quietly benefiting from Trump’s decisions is gold, which has rallied to record highs as investors seek a safe haven.

    While Trump has not mentioned gold as a tariff target, it is worth remarking that much of the precious metal’s current rally of about 15% since his November election victory to Wednesday’s close of $2,932.06 an ounce, is built on buying by U.S. investors.

    From December to February, some 600 metric tons of gold was transferred to CME-approved vaults, says consultancy Metals Focus, which has tightened physical supply in the top-consuming region of Asia.

    In some ways gold is the poster child for how commodities should deal with Trump. Assess the risks, act accordingly and don’t make too much noise about it.

    Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.



    Source link

    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email
    Previous Article‘It’s going to make us move’: Brighton residents face skyrocketing property assessments
    Next Article Model train maker Hornby to quit ailing London stock market

    Related Posts

    Commodities

    Multi Commodities Exchange to launch electricity futures on July 10

    July 4, 2025
    Commodities

    CAD holds gains through upper 1.35s – Scotiabank

    July 3, 2025
    Commodities

    Indonesia Eases Import Rules for 10 Key Commodities

    July 3, 2025
    Leave A Reply Cancel Reply

    Top Posts

    How is the UK Commercial Property Market Performing?

    December 31, 2000

    How much are they in different states across the US?

    December 31, 2000

    A Guide To Becoming A Property Developer

    December 31, 2000
    Stay In Touch
    • Facebook
    • YouTube
    • TikTok
    • WhatsApp
    • Twitter
    • Instagram
    Latest Reviews
    Bitcoin

    Comment transférer du Bitcoin vers Ethereum / Solana et inversement ?

    May 6, 2025
    Commodities

    Closing prices for crude oil, gold and other commodities | Business

    July 11, 2024
    Bitcoin

    La «Journée de libération» du tarif de Trump choque le monde – Bitcoin prêt à exploser?

    April 4, 2025
    What's Hot

    Are UK stock markets facing an existential crisis?

    June 12, 2025

    Sensex tanks 880 points, Nifty 50 near 24K; why is Indian stock market falling for last two sessions? 5 key reasons

    May 9, 2025

    How Does the Stock Market Benefit from AI and Data Science?

    May 4, 2025
    Most Popular

    Le SBTC de Stacks gagne du terrain: les meilleures entreprises comme Jump Crypto Deposit tôt dans Bitcoin Defi jouent

    February 28, 2025

    Tesla quietly moves $769m in Bitcoin to multiple unknown wallets

    October 16, 2024

    ‘Unprecedented’ stock market rotation ‘should stop very soon’: Barclays By Investing.com

    July 30, 2024
    Editor's Picks

    Know Labs, Inc. annonce l’adoption d’une stratégie de trésorerie Bitcoin, à commencer par 1 000 Bitcoin

    June 7, 2025

    Asia stocks dip amid election uncertainty; Japan extends gains ahead of BOJ By Investing.com

    October 30, 2024

    How The Gaming Industry’s Financial Performance Impacts Stock Market Valuations

    June 25, 2025
    Facebook X (Twitter) Instagram Pinterest Vimeo
    • Get In Touch
    • Privacy Policy
    • Terms and Conditions
    © 2025 Invest Insider News

    Type above and press Enter to search. Press Esc to cancel.