The announcement of Donald Trump’s tariff agenda on the 2nd of April prompted a significant recalibration across global metals and energy markets. While certain commodities received unexpected exceptions, prices tumbled regardless, signalling broader concerns around demand, strategic dependencies and economic slowdown
In Natixis CIB’s latest webinar, Bernard Dahdah, Commodities Research, Metals and Mining; Joel Hancock, Commodities Research, Energy; Thomas Hodge, Base Metals Option Trader; Vincent Klaeyle, Head of Energy and Non-linear Trading and Pierre-Chanel Rouxel, Precious Metals Trader, unpacked the reactions across commodities, assessing the driving forces behind market movements and the shifting strategic landscape.
Despite a baseline 10% tariff being imposed on all countries – with many facing significantly higher rates – metals and energy markets were notably exempt. However, the market response was far from complacent. Instead, the exemptions triggered a wave of repositioning, revealing deep vulnerabilities in the US supply chain and contributing to a bearish outlook amid global recessionary fears.
Metals spared from Trump’s tariffs and markets realign
Most base metals, precious metals and critical escaped direct tariffs, revealing the US’ considerable dependency on imported materials: 80% for rare earth elements, 76% for zinc, and 53% for nickel, with aluminium and copper at 44% and 41% respectively. While steel and aluminium remain under their existing 25% tariff structure, no new measures were added.
The market reaction was swift. Inventories of copper, aluminium and other metals have dramatically increased alongside a shift in gold from London to New York as US traders rushed to import metals into the country before tariffs took effect. This “hoarding effect” inflated global prices temporarily, but the underlying sentiment remained negative.
Indeed, with demand cooling and growth remaining slow, market pricing has shifted down. The Exchange for Physical (EFP) premium in gold markets collapsed following the announcement, with an even steeper drop in silver, where the premium plummeted from nearly $1 to less than 10 cents. Meanwhile, copper, although exempt for now, saw prices fall by around 3%, with markets anticipating that once the US concludes its Section 232 investigations (examining the effects of imports on national security), further tariffs may be imposed.
The US exposes strategic vulnerability
The bearish trajectory persists, as sluggish global growth continues to depress prices, with aluminium forecast to fall to around $2,300 per tonne and copper expected to hover near $9,000, with a potential floor of $8,500. Gold may see modest gains, bolstered by uncertainty and safe-haven demand, though its rise is likely to be subdued.
While the exemptions provided temporary relief, they also exposed the US’ strategic Achilles heel: its reliance on foreign metal supplies. This has raised the spectre of retaliatory actions, particularly from China, which may consider export licensing restrictions – especially for battery-related critical minerals.
Sluggish growth drives crude sell-off despite exemption
Energy commodities, including oil and gas, are also exempt from tariffs. Yet the markets reacted with a sharp sell-off, driven by weakening demand expectations and global oversupply. Brent crude dropped by 6% following Trump’s announcement, settling at $67.75 a barrel. The exemption of Mexican and Canadian oil and a lack of secondary tariffs on Venezuelan oil exacerbated the downturn, as long accumulations from the past two weeks were flushed, leaving an over-supplied energy market.
The demand side is notably concerning, particularly in emerging Asian markets. Of the 1 million barrels a day of demand growth pencilled in for 2025, 80% of that comes from non-OECD Asian countries. Any weakening in this segment will have outsized implications for the global energy balance.
Typically, downturns in demand are rebalanced with a restriction in supply. However, OPEC has done the opposite, announcing plans to add 411,000 bpd to the market in May – well above the previously planned 135,000 bpd – highlighting the concern that OPEC is deciding not to cut production to appease the Trump administration and its goal of driving oil prices down. Meanwhile, non-OPEC supply remains largely insensitive to price, driven by long lead time conventional projects. With lowering demand levels across the board, the outlook for oil prices is poor.
A fragile future for global commodities
In the short term, volatility is expected to remain high as countries negotiate tariff rates and markets attempt to price in new geopolitical risks – particularly in the Middle East. Price forecasts are expected to remain in the US$60-70/barrel range, though the downside risk looms closer to US$50/barrel if demand does not improve.
Retaliatory and secondary sanctions remain key swing factors. However, with China already facing a 54% tariff on some imports, a 25% additional surcharge is unlikely to meaningfully curb its oil demand. Therefore, supply remains robust, even as demand weakens.
The broader macroeconomic outlook is unambiguously negative. Tariff-driven uncertainty is weighing heavily on investment and consumption, translating into lower demand across the board – particularly in energy markets where oversupply is already an issue.
As the dust settles on the initial market reaction, traders and investors are bracing for an extended period of adjustment in global commodity markets. The exemptions granted to metals and energy commodities have triggered a deeper recalibration, exposing vulnerabilities in US supply chains that could become leverage in an escalating trade conflict.
Meanwhile, energy markets face a challenging roadmap of weakening demand, unrestricted supply growth, and political constraints limiting traditional rebalancing mechanisms. What began as a tariff announcement has become a broader stress test for global commodities – and the results suggest that volatility and uncertainty are here to stay.
