Gold, Steel, and Aluminium Prices Soar After Trump’s Tariff Announcement.
Gold prices surged to an all-time high, and aluminium costs experienced a significant increase following President Donald Trump’s announcement of new 25% tariffs on steel and aluminium imports into the US. These measures have created waves in global financial markets, triggering investor concerns and heightened commodity prices.
The spot price of gold rose more than 1%, reaching $2,896 (£2,336) per ounce on Monday morning, breaking the previous record set just days before. Since the beginning of the year, gold has risen by 10%, with investors seeking a safe haven amid the uncertainty of Trump's policies. At the end of 2024, gold was priced at $2,623 an ounce.
Aluminium prices also spiked as fears grew that the tariffs would lead to supply disruptions and harm economic growth. The three-month aluminium contract on the London Metal Exchange climbed 0.3% to $2,635 (£2,122) per tonne.
Concerns Over Economic Impact and US Manufacturing
The UK steel industry expressed concern about the potential damage Trump's tariffs could cause, describing them as a “devastating blow.” In response, Brussels has promised to protect the EU's economic interests. Trump has also signaled that reciprocal tariffs on other nations, including the EU, may be introduced soon. “Very simply, it’s: if they charge us, we charge them,” Trump said during a press briefing on Air Force One.
The tariffs are expected to increase costs for US manufacturers, with Daniel Hynes, a senior commodity strategist at ANZ Bank in Sydney, commenting: "I suspect US manufacturers will have to wear higher prices as a result of these 25% tariffs. Its import reliance is high, around 40%-45% for aluminium and 12%-15% for steel."
Global Reactions and Potential Exemptions
Countries like Canada, Mexico, Brazil, South Korea, and Vietnam are the largest exporters of steel to the US, with Canada also being a major supplier of aluminium. In Australia, ministers are pushing for an exemption from the tariffs, with Prime Minister Anthony Albanese emphasizing the importance of “free and fair trade” during upcoming discussions with Trump.
Rising Dollar and Treasury Concerns
In addition to the tariff concerns, the US dollar rose by 0.2% against major currencies, while yields on US government bonds saw a slight increase. President Trump also raised the issue of potential fraud in US treasury debt payments, hinting that the country’s public debt might be overstated. “We’re even looking at treasuries. There could be a problem – you’ve been reading about that, with treasuries and that could be an interesting problem. It could be that a lot of those things don’t count,” Trump stated.
Independent budget analysts suggest that Trump’s proposed tax cuts could lead to trillions of dollars in additional debt, further compounding economic concerns.
Trump's announcement of a 25% tariff on steel and aluminium imports has sent shockwaves through global markets. While the move aims to protect U.S. industries and boost domestic production, it raises concerns over the long-term economic impact. The tariffs have already led to surges in gold and aluminium prices, indicating market uncertainty. Countries heavily reliant on steel and aluminium exports, such as Canada and South Korea, are likely to feel the strain, which could lead to retaliatory tariffs and further trade tensions.
The potential "devastating blow" to the UK steel industry is a significant concern, as the higher prices will likely increase costs for manufacturers. On the flip side, the tariffs could benefit U.S. producers by reducing foreign competition, but at the expense of consumers who will face higher prices. Additionally, Trump's focus on U.S. debt reduction through potentially fraudulent findings adds further complexity to the economic outlook, raising questions about the overall strategy and its risks.
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