Consumer Prices Rose in June
Consumer prices ticked up in June from a year ago as the price of goods and services increased 0.3% putting the 12-month inflation rate at 2.7%. The price increases were most pronounced on items like coffee, beef, clothing, furniture and natural gas. Other sectors, however, saw prices decline like the cost of TVs, smartphones and airline tickets.
But evidence is mounting that Trump’s tariffs are starting to impact consumer prices as economists have been warning:
“Economists generally agree that tariffs raise prices and hurt economic growth but disagree over how big the impact of the White House tariffs will be, or when any price increases might start to show up. Many companies rushed to fill up their inventories by buying goods before tariffs took effect, making it easier for them to hold off on price increases in the spring … [but] those who worry that tariffs could drive meaningful price increases later this year are likely to have seen enough in the data to maintain that view.”[1]
Price inflation creates economic uncertainty which could further increase the safe haven appeal of precious metals this year and well into next, particularly gold.
Tariff-Driven Inflation
Lest we forget that tariffs are an import tax making imported products more expensive. Those imports include raw materials, industrial goods, electronics, agricultural products, pharmaceuticals as well as finished goods.
While the importer pays the added duty on goods being brought into the United States, that cost is typically passed down to the consumer, and it’s now starting to show up in the cost of everyday items, fueling price inflation.
“Prices of household furnishings and supplies shot up 1.0%, the largest advance since January 2022, after climbing 0.3% in May. There was a record 4.2% jump in the prices of window and floor coverings and other linens. Prices for appliances surged 1.9%, the biggest rise since August 2020, while the cost of apparel rebounded 0.4%. Sporting goods prices accelerated 1.4% while toys vaulted 1.8%, the most since April 2021.”[2]
In addition to pass-through import fees, tariffs contribute to overall inflationary pressures by raising the price of raw materials like steel, aluminum, lumber, machinery and electrical components. This, in turn, increases the cost of manufacturing, production, and fabrication — which also fuels price increases.
Tariff-driven inflation not only reduces consumer purchasing power it can also cause supply chain disruptions, reduce competitiveness, increase market uncertainty, and trigger retaliatory tariffs.
Trade War Round Two?
Just when we thought, countries were coming to the table, deals were being struck, and world commerce was stabilizing — President Trump has intensified the global trade war. Hefty tariffs of 10% have been imposed on all imports, levies as high as 50% have been slapped on steel and aluminum, and 25% on all foreign cars brought into the US.
Trump has hit China with a 30% levy on all of its goods, threatened the EU with a new 30% tariff and Brazil with a 50% levy starting August 1st. [3]
And in an effort to end the Russia-Ukraine conflict the President has threatened to impose secondary tariffs on the Kremlin of as high as 100% to ramp up pressure on Vladamir Putin to negotiate and further isolate the Russian Federation from the global community. Secondary tariffs are a form of third-party punishment designed to also penalize countries who choose to do business with Russia.
“President Donald Trump said Monday that he would impose secondary tariffs on Russia of 100% if a peace deal with Ukraine isn’t reached in 50 days. ‘We are going to be doing very severe tariffs if you don’t have a deal in 50 days, perhaps 100%,’ he said in a meeting with NATO Secretary-General Mark Rutte in the Oval Office. The secondary tariffs would work by placing a sanction on any country that trades with Russia. For example, the U.S. could slap a 100% tariff on any imports to the U.S. from its trade partners that do business with Russia.”[4]
Trade wars not only spike inflation, they cause global damage, harm diplomatic relations, and can even lead to stagflationary conditions.
So, what does it all mean for gold?
Precious Metals have long been perceived as a reliable inflation hedge. Gold, in particular, tends to increase in value on the mere anticipation of higher prices. When inflation erodes purchasing power, the dollar weakens against other currencies. And since gold is priced in dollars per ounce — it becomes cheaper for foreign investors to acquire it, ultimately increasing demand.
But gold is also a safe haven amid the heightened global tensions that sweeping tariffs and trade wars bring. These types of policy levers can erode trust, shift alliances, and permanently alter trade relationships.
According to Professor Robert Gulotty at the University of Chicago, the U.S. has increasingly turned to import duties as a negotiation tool with respect to trade imbalances and Trump’s recent weaponization of tariffs now threatens to upend long-standing U.S. relationships.
“In the 20th century, the U.S. developed a system to address those tensions in a constrained way, including institutions like the World Trade Organization and its dispute settlement systems. Under the past several administrations, the U.S. has abandoned that system. Now Trump’s tariffs are being done in a way that ignores prior treaty commitments, combined with hostile rhetoric about national security and a seeming drive toward imperialism. Decades of diplomatic effort to negotiate these treaties, build trust and develop a system to address economic frictions have been abandoned.”[5]
As trade wars, protectionism and import quotas become an increasingly common foreign policy tool, even with respect to friendly nations — the resulting economic uncertainty will fuel gold as a form of wealth protection, particularly in light of its high liquidity, universal appeal, and strong global demand.
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[1] https://www.wsj.com/economy/inflation-hit-2-7-in-june-in-line-with-expectations-8f92a8cd?
[2] https://www.reuters.com/business/us-inflation-expected-rise-june-with-tariff-driven-price-hikes-2025-07-15/
[3] https://www.aljazeera.com/economy/2025/7/15/us-inflation-from-tariffs-that-economists-feared-begins-to-emerge
[4] https://www.barrons.com/articles/trump-tariffs-russia-eu-mexico-trade-news-c9b63049
[5] https://news.uchicago.edu/story/how-do-tariffs-work-and-who-will-they-impact-uchicago-experts-explain
