Soaring gold prices driven by Donald Trump's tariff policy
Tariffs on Gold Imports Impact Global Markets
In a recent development, the US has imposed tariffs on imports of one-kilogram and 100-ounce gold bars as part of a broader trade policy. This move, reacting to trade imbalances and tariff disputes, particularly with Switzerland, a major gold refiner, has sent ripples through global markets.
The tariffs aim to address the growing trade surplus that Switzerland holds with the US. The US administration views this imbalance and the substantial volume of gold imports, seen as partially front-loaded before the tariff imposition, as factors justifying the tariffs. These tariffs are part of an attempt to restructure US trade agreements and tariffs more aggressively.
The initial reaction in the gold market was a drop in bullion prices, more than 1%, due to market jitters and uncertainty as traders awaited clarification on the US government's position. However, prior to the tariff announcement, gold futures contracts had reached record highs, likely influenced by anticipated import costs and supply concerns.
Switzerland, the world's largest gold refining hub, will be affected by the tariffs. One-kilo bars make up most of its bullion exports to the US, and the increase in costs on these exports could potentially reduce trade volumes or shift sourcing patterns. This complicates Swiss-US trade relations and could cause disruptions or re-routing in global gold supply chains.
The tariffs on gold bars are a blow to Switzerland, which was already reeling from the 39% levy imposed by Trump. If the tariff rate of 39% is applied, it would subject the additional gold exports to a further £18 billion in levies.
Analysts believe the tariff on gold bars could create supply bottlenecks, pushing up the price of spot gold. Bob Haberkorn, market strategist at RJO Futures, expects gold to remain elevated until more information comes forth from the Trump administration on the 39% tariffs relating to gold kilo bars.
The tariffs have already had an impact on the stock market, with shares in London-listed miners Fresnillo and Greatland Resources rising by 1.6% and 3.8% respectively due to the expected rise in gold prices.
As the situation unfolds, it is unclear when levies on gold will be imposed and if they apply to exports from all countries. It is also unclear whether other types of gold, such as the 400 troy ounce bar used in London, will be subject to tariffs.
Investors are advised to stay informed and monitor the situation closely, as the tariffs create short-term uncertainty in gold markets, pressuring prices downward initially but reflecting underlying tensions in trade, particularly between the US and Switzerland, that could influence gold flows and refining economics longer term.
References: 1. Gold prices fall as US imposes tariffs on gold imports 2. US imposes tariffs on Swiss gold imports
- The tariffs on gold imports are causing investors to closely monitor the personal-finance and business sectors, as they could impact gold prices and in turn, influence their investment strategies.
- The imposition of tariffs on gold imports by the US is not only a financial matter, but also a political one, as it reflects tensions in global trade relationships, particularly between the US and Switzerland.
- The international general-news landscape is abuzz with debates on the US tariffs on gold imports, discussing their implications for global markets, trade agreements, and the economic landscapes of countries like Switzerland.
