After threatening Mexico and Canada with punishing 25% tariffs and imposing U.S. levies of 10% on all Chinese products coming into the U.S., President Trump has just pulled the trigger on 25% tariffs on all steel and aluminum imports to the United States.
The tariffs will apply to millions of tons of steel and aluminum coming in from Canada, Brazil, Mexico, South Korea, and other countries that had been entering the U.S. duty free under various carve-outs.1https://www.reuters.com/markets/asian-eu-steelmakers-shares-fall-after-trump-escalates-tariffs-2025-02-10/ The tariffs go into effect on March 12th and according to the White House, they will be levied on all foreign imports of steel and aluminum regardless of country of origin. The President characterized it as “the beginning of making America rich again.”2https://www.cbsnews.com/news/trump-to-announce-tariffs-aluminum-steel-imports-monday
Are Tariffs Making America ‘Less Great’?
But Trump’s tariffs could trigger higher consumer prices, retaliatory levies, and a full-blown trade war which could adversely impact American businesses and households, effectively making America anything but rich.
“Virtually all economists think that the impact of the tariffs will be very bad for America and for the world. They will almost surely be inflationary,” according to Joseph Stiglitz, an economics professor at Columbia University and a winner of the Nobel prize in economic sciences.3 https://www.theguardian.com/business/2025/jan/31/trump-tariffs-us-economy
Aside from the president’s desire to halt illegal immigration, stop the flow of deadly fentanyl into America, and level the playing field with respect to global trade — tariffs have a host of drawbacks and unintended consequences:
- Higher consumer prices
One of the most immediate impacts of tariffs is a rise in consumer prices. Goods ranging from electronics like laptops and smartphones to everyday groceries may see significant price hikes. Economists have noted that tariffs can reduce the US GDP by as much as 0.64%. - Global economic slowdown
The ripple effects of tariffs are not confined to the United States. Economists project that China could experience a GDP decline of 0.68%, while the EU might see a drop of 0.11%. These reductions highlight how tariffs can disrupt global trade. - Inflation and interest rate concerns
Tariffs may contribute to inflationary pressures by driving up the cost of goods. In response, central banks could raise interest rates, potentially slowing economic growth. - Supply chain disruption
Modern industries rely heavily on global supply chains, and tariffs threaten to upend this balance. Higher costs and logistical challenges could disrupt technological, automotive, and retail production. - Retaliatory trade wars
The most significant risk is the potential for a broader trade war. Countries impacted by US tariffs could retaliate with their own measures, escalating tensions and causing further economic harm.4https://evmagazine.com/news/the-trump-tariffs-pros-cons-global-impact
What if the World ‘Strikes Back’?
As a matter of fact, Mexico and Canada have both vowed to retaliate against the United States if Trump levies fees on their goods. China has already announced retaliatory tariffs of 10% to 15% on over $21 billion of US exports. The European Union has also said that it would not hesitate to retaliate — as it did in Trump’s first term with tariffs of €2.8 billion on US goods. The president’s tariff wars have not only upended trade relations, but created policy uncertainty that has rattled the stock market and pushed gold prices to new records.
“Gold continued its record-breaking rally on Monday, surpassing the key $2,900 level for the first time, as US President Donald Trump’s new tariff threats drove safe-haven demand higher … Monday’s rally marks the seventh time gold set a new record in 2025. Bullion has now risen nearly 11% for the year, having already recorded a staggering 27% gain in 2024. Analysts believe that gold is now gaining enough momentum to reach the $3,000 milestone, as an escalation of the trade war is expected to propel demand for safe-haven assets higher.”5https://www.mining.com/gold-price-soars-past-2900-on-new-tariff-threats
Gold’s safe haven appeal amid the latest tariff war is grounded in its long-standing reputation as an effective and reliable inflation hedge. In addition, the precious metal has global appeal, it is a key reserve asset of the world’s central banks, and its price almost always rises amid financial chaos, crisis, and catastrophe.
A senior analyst at ActivTrades sees more upside for gold:
“Demand for the safe-haven precious metal is increasing as anxiety grows over the potential impact of the new US administration’s protectionist drive on global economic growth prospects and its inflationary effect on US domestic prices. Against this backdrop, gold risk remains tilted to the upside, with further price gains possible in the near term.”6https://www.thestreet.com/investing/gold-price-eyes-3000-mark-as-bullion-surges-on-trump-tariff-risks
Most Banks Predict Gold Will go Even Higher
Brokerage firms are not the only ones forecasting more gold records on the horizon. Citigroup, Bank of America, Goldman Sachs, and HSBC Global all predict that gold prices will continue to rise throughout 2025. The precious metal has eclipsed twelve records in just two months, and its perma-rally reflects the uncertainty and volatility that is now enveloping Wall Street.
“The price of gold has been breaking record after record this year, continuing its unwavering rally from the previous calendar year without any significant pullbacks. The yellow metal, which is seen as the safest investment, has been drawing support from all market participants, including investment firms, central banks, and retail investors, leading it to see one of the best record rallies after the COVID-19 pandemic.”7https://www.livemint.com/market/commodities/gold-sets-10-record-highs-in-early-2025-surge-rises-nearly-10-what-s-driving-the-rally-11739155019807.html
Since last year, gold prices have been fueled by ongoing geopolitical tensions, stubborn inflation, volatile markets, and unprecedented demand from the world’s leading monetary authorities. The new threat of trade wars and retaliatory tariffs are now pushing the precious metal into uncharted territory — as it approaches $3000/oz and beyond.
Year-to-date gold is outperforming both the S&P 500 and bitcoin and as global risks continue to mount it is becoming the go-to strategic asset of 2025 particularly for investors seeking portfolio protection and economic peace of mind.
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2 https://www.cbsnews.com/news/trump-to-announce-tariffs-aluminum-steel-imports-monday
3 https://www.theguardian.com/business/2025/jan/31/trump-tariffs-us-economy
4 https://evmagazine.com/news/the-trump-tariffs-pros-cons-global-impact
5 https://www.mining.com/gold-price-soars-past-2900-on-new-tariff-threats
