Commodities market shaken by trade tensions

The reduction of the American trade deficit appears to be one of the top priorities of the new Trump administration. This new trade war has already significantly impacted the commodities market, either directly or indirectly. Here, we detail several examples.

For several years, the United States has become a net exporter of oil and gas, after being a net importer for decades. It is therefore not surprising to see that LNG issues play a prominent role in current trade negotiations between the United States and its trading partners. Indeed, for several countries, importing more American LNG would be a way to reduce their trade surplus with the United States. For example, Taiwanese operators recently announced a plan to significantly strengthen their supplies of American gas over the coming years. The share of the United States in the island's LNG imports could thus triple, rising from 10% currently to 30% within 10 years. Europe has also used this argument in the negotiations of its trade deal with the United States. However, the expectations of the American administration do not seem to be limited to export volumes. Donald Trump has indeed clearly called on his international partners (notably Japan and South Korea) to invest in "Alaska LNG," a megaproject aimed at exploiting the resources of the Alaskan Arctic and enabling their export through the construction of a nearly 1,500-kilometer-long pipeline. In the long term, it could allow for the exploitation of 3.5 bcf/day, representing a substantial increase compared to current capacities, primarily intended for export to Asia.

In contrast, imports of energy products from Canada are subject to a 10 percentage point increase in specific tariffs, and the volumes of Canadian oil imported have slightly decreased since the measure came into effect. Furthermore, the announcements from "Liberation Day" on April 2 have caused a decline in global prices due to the deterioration of economic prospects.

In recent years, the prices of certain foodstuffs have been marked by significant volatility spikes. One can think of the price of fruits and vegetables in India (annual spike of +60% at the end of 2019), eggs in the United States (annual spike of +70% at the beginning of 2024), or rice in Japan (annual spike of +101% in May 2025). In the majority of cases, these price surges have been caused by extreme weather events (droughts, floods, fires, etc.), the spread of avian flu epidemics, or supply disruptions related in particular to urbanization and an aging population. The outbreak of war in Ukraine has also led to a sharp increase in the prices of fertilizers and cereals, of which Ukraine, Belarus, and Russia are significant producers and exporters.

A new factor has been added in recent months: the trade war. Agricultural products (soybeans, chicken, etc.) were among the first retaliatory measures taken by China against the United States, which caused a wave of concern among American farmers. During the previous trade war between the United States and China, imports of American agricultural products were halved in a matter of months - notably benefiting other major producing countries like Brazil. This rapprochement between the two Southern countries is likely one of the reasons explaining the threat of a 50-point tariff increase against Brazil.

Between China and Europe or between the United States and Europe, agricultural commodities also play an important role and are regularly used for retaliatory measures. This was notably the case for European spirits or Spanish pork, which were taxed by China in retaliation for the tariffs on imports of Chinese electric vehicles imposed by the European Union. Donald Trump also used the recent spike in rice prices (which has increased by an average of 5% each month since the beginning of 2025) as leverage against Japan, repeatedly criticizing the import barriers set up by Tokyo to protect its agricultural sector.

As with oil and gas, many countries have expressed their willingness to increase their imports of American agricultural products in order to obtain a reduction in tariffs. Such proposals have been notably put forward by Thailand, the Philippines, and Indonesia, but they have (to date) received no concessions from the United States.

The US dollar lost just over 10% against major developed currencies in the first half of 2025, a performance decline of the greenback not seen since 1973. At the same time, gold experienced one of its best starts to the year in 2025 of the 21st century. The explanation likely lies in the fact that the desire to reduce the US trade deficit by implementing the largest tariff increases in nearly a century reduces and will significantly reduce the demand for dollars from the rest of the world. Furthermore, the unpredictability of the new US administration and recurring threats weaken the dollar's status as the dominant currency and contribute to the decline in its international use, even though there is currently no currency capable of replacing it. This wave of dedollarization clearly benefits gold as central banks diversify their reserves away from the dollar and in favor of gold and other currencies such as the euro.

After the war in Ukraine and the tensions in the Middle East, the commodities market has been greatly shaken by the new trade war waged by the United States against its trading partners. The impact is very different depending on the materials, with some being directly targeted by tariff increases (steel, aluminum, copper, oil), others being part of China's negotiation levers (rare earths, agricultural raw materials), and others finally benefiting from the recent wave of dedollarization (gold, silver).