Commodities Impact Mixed as Trump Announces Reciprocal Tariffs

The long—awaited unveiling by President Donald Trump of sweeping reciprocal tariffs on imports into the US triggered a slump in oil prices while gold rose.

Author of the article:

Bloomberg News

Robert Tuttle, Ilena Peng, Michelle Ma, Yvonne Yue Li and Jennifer A. Dlouhy

Published Apr 02, 2025  •  3 minute read

Coffee beans are roasted at a shop in Hanoi, Vietnam, on Tuesday, Aug. 30, 2022. Vietnam's vast hoard of coffee beans is shrinking, a phenomenon that's set to push rising global prices even higher. Output from Vietnam, the world's largest robusta supplier and second-largest coffee producer, is also expected to drop in 2022-23. Photo by Linh Pham /Bloomberg

(Bloomberg) — The long—awaited unveiling by President Donald Trump of sweeping reciprocal tariffs on imports into the US triggered a slump in oil prices while gold rose. 

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There was also an important carve-out for commodities from Canada and Mexico. Here’s a round-up of the initial impact of Wednesday’s big announcement.

Metals

Following Trump’s appearance, the White House issued a fact sheet that said steel, aluminum, gold and copper imports won’t be subject to reciprocal tariffs, providing at least some relief to domestic buyers who are already bearing the cost of Section 232 tariffs of 25% on all imports of the key metals. Meanwhile gold jumped as much as 1% as investors sought safety following the tariff headlines, before paring gains. Gold has climbed about 19% this year after a ferocious run in 2024.

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Oil and Gasoline

Crude immediately dropped as trading started in the Asian morning. Futures fell more than 2%, dipping below $70 a barrel, amid concerns about declining demand and the potential for a trade war.

But there was also a bit a reprieve for some oil producers and traders. Canada and Mexico, the two biggest foreign suppliers of oil to the US, were exempted from reciprocal tariffs under the USMCA North American trade agreement, which was signed during the previous Trump administration to replace the North American Free Trade Agreement.

Crude from Canada rallied in late trading, with Western Canadian Select’s discount to the US benchmark shrinking to $9.40 a barrel, the smallest since 2020.

Concerns about the tariffs sparking higher pump prices initially boosted futures as Trump started making his announcement, but the exemption for Canada and Mexico spurred futures to give up the post-settlement gains. Gasoline futures subsequently dropped in during early Asia trading hours.

Agriculture 

US farmers also benefit from the reprieve on USMCA goods. The US gets roughly 90% of its potash fertilizer from other countries, mostly from Canada. Non-USMCA compliant energy and potash will be tariffed 10%.

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The exemption for USMCA products is good news as well for dairy, canola and sugar buyers. Mexico is the biggest supplier of sugar to the US, while Canadian farmers rely on the US and China for most of their canola exports.

Despite the USMCA exemption, Trump called out Canada for its tariffs on dairy products.

Vietnam, facing a 46% tariff rate, is the world’s biggest producer of robusta coffee, used in instant coffee. The typically cheaper variety was expected to help offset supply tightness in the more premium arabica bean, which had sent prices soaring to record highs. Other top coffee producers, including Brazil and Colombia, are subject to 10% tariffs. Meanwhile, Ivory Coast, the world’s biggest cocoa grower, is facing 21% tariffs.

Clean Energy

Vietnam, Thailand, Cambodia and Malaysia together account for about 80% of US imports of solar panels. The four nations face reciprocal tariffs that are expected to build on existing levies hitting some solar cells and panels from the region, and any antidumping and countervailing duties that US authorities may order in coming weeks.

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US battery makers may also be affected with the majority of the world’s graphite coming from China. Chinese imports now face a tariff of at least 54% under tariffs Trump has ordered during his second term in office.

There’s been an uptick in US clean tech manufacturing in recent years — in part spurred by President Joe Biden’s Inflation Reduction Act as well as levies on foreign solar supplies that encouraged panel production in the US. But the US is still very dependent on parts of Asia for many parts of the supply chain. These announced tariffs are another potential dent to the clean energy buildout by a president keen to boost fossil fuels.

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