Trump’s tariffs target commodities

It was generally a negative week for commodity prices. Oil prices tumbled and precious metals prices were buffeted by Jerome Powell’s testimony, which all but ensured a rate hike this month. China’s official manufacturing PMI dipped sharply, which is consistent with slower domestic demand and the drop in industrial metals prices. The big news, however, was the announcement of tariffs on US steel and aluminium imports on national security grounds, which sent US steel prices higher. A formal announcement by President Trump, with detail on the extent of these protectionist measures, is expected next week. Commodities markets will also be keeping a close eye on China’s February trade data (Thursday) which will provide an indication of commodities demand at the start of the year. Finally, we expect February’s US Employment Report (Friday) to show a higher-than-expected 250,000 gain in non-farm payrolls, which could weigh on the price of gold.