Trump Tariff Shockwave: The Commodities Market Faces Restructuring

April 2nd marks the one-year anniversary of what Trump called "Liberation Day," when he signed two new tariff measures, pushing the trade war to new heights: first, a 100% tariff on imported patented drugs and pharmaceutical ingredients under Section 232 of the Trade Expansion Act of 1962, along with exemptions or tariff reductions to pressure pharmaceutical companies into agreements; second, maintaining a 50% tariff on various imported steel, aluminum, and copper products, with a uniform 25% tariff on finished goods and derivatives containing these metals.

These tariff measures have multi-layered impacts on the commodities market. First, the 50% tariffs on steel, aluminum, and copper directly boost the prices of these base metals in the U.S. market, which then transmits to downstream manufacturing costs and disrupts global metal pricing systems. Second, the 100% drug tariffs, though targeted at specific industries, reflect a comprehensive upgrade of the Trump administration’s "America First" trade policy, implying that more products may be subjected to high tariffs in the future, leading to a reorganization of global trade flows. Third, the tariff policies are compounded by Middle East geopolitical tensions—oil prices soaring above $110 due to geopolitical risks, while trade barriers push up industrial product prices, jointly intensifying global inflation pressures.

In this environment, the appeal of hard assets like gold further increases. However, it’s important to note that the dollar, strengthened by safe-haven capital inflows and trade surplus expectations, exerts downward pressure on dollar-denominated commodities. Trump’s speech on April 1st already sent mixed signals of "withdrawal" and "continued strikes." If tensions between the U.S. and Iran ease and the inflationary effects of tariffs are absorbed by the market, the commodities market could experience sharp re-pricing.