Precious Metals Surge as Manufacturing Supply Chains Brace for Turmoil (AI Translation)

【周刊提前读】贵金属暴涨 全球制造业供应链迎接巨震

The ancient principle of purchasing gold during times of instability has been mirrored in modern markets due to recent geopolitical and economic changes. Former U.S. President Donald Trump’s administration introduced significant tariffs on essential raw materials like steel and aluminum, signaling potential further tariffs on precious and industrial metals, thereby altering global markets. Trump maintained a firm stance against easing these tariffs, affecting countries worldwide and causing metal prices to surge. For example, in early 2025, expectations of tariff policies under Trump's return to office drove the price of gold on the New York Commodity Exchange to new heights, paralleling concerns about broader tariffs on metals. [para. 1][para. 2]

Analyst Xiao Jing from SDIC Essence Futures highlighted the strategic contraction of U.S. industries under Trump's tariffs. In March 2025, this policy extended to copper, with reciprocal tariffs targeting Canada and Mexico announced, albeit with some “breathing space” granted to certain countries. This isolationist approach greatly increased U.S. import costs, evidenced by the substantial premiums on metals such as copper and aluminum in the U.S. compared to global benchmarks like the London Metal Exchange. Consequently, these tariffs have prompted U.S. firms to bolster inventories, redirecting global metal supplies and boosting prices. The ripple effects include notable price increases in London and regional imbalances where the United States’ prices often exceeded others. [para. 3][para. 4]

Market speculation surged when rumors suggested that Trump might expedite the introduction of tariffs on copper, months earlier than initially projected. Such anticipations prompted market fund influxes, hinting at the influence of uncertainty on trading behaviors. Industrial metal prices were further buoyed by demand in northern hemispheres and disruptions in key supply sites, such as in Congo, amidst geopolitical tensions. Meanwhile, China’s demand spikes preemptively leveraged the tariffs on metals against China, Canada, and Mexico, aiming to maximize output before new tariffs took effect in April 2025. [para. 4][para. 5]

This geopolitical climate reflected broader U.S. strategic aims of reinvigorating domestic manufacturing, a focal aspect of Trump's platform. The imposition of tariffs, combined with infrastructural investments and shifts in foreign policy, supported the endeavor of bringing industrial capacity home. Additionally, the U.S.'s isolationist trade measures attempted to reduce its trade deficit, targeting essential minerals and metals foundational to industries like manufacturing and defense. Global responses to these policies were mixed, with some regions, like the Middle East, seeing potential opportunities to become manufacturing nodes, while Europe found itself caught in strategic decoupling from U.S. economic pressures. [para. 6][para. 7]

The xenophobic policy stance led to a notable surge in gold procurement by the U.S., particularly from Switzerland. Market observers like Li Gangfeng speculated that the U.S. might soon impose tariffs on gold imports from these regions once it secures enough stock, viewing it as part of a broader strategy to hedge against the upheaval resulting from tariffs. This increased gold movement reflected a defensive posture amid the turbulent trade landscape, with visible implications on global market prices and logistics flows affecting other commodities, such as copper. [para. 8][para. 9]

As the world faced U.S. economic measures under Trump’s policies, adaptive responses manifested among countries grappling with realigned trade flows, with some embracing protective strategies. This strategic shift highlighted overarching concerns about U.S. policy directions and their worldwide ramifications, shaping discussions over manufacturing strategy, resource reallocation, and fiscal policies in the international community. [para. 10][para. 12]

The cycle fostered by enhanced tariffs transformed the U.S. metals market into a domestic-centric system, prompting investments in capacities like steel, yet challenging segments like aluminum due to higher electricity costs and infrastructure constraints. Trade strategies involved leveraging national advantages amid escalating global competition, with broader economic implications extending across sectors dependent on raw materials, from semiconductors to energy. [para. 13][para. 16]