Golden Tariffs: How Trump’s Trade Wars Could Spark a Gold Rush

President-elect Donald Trump has never been one to shy away from bold economic policies. His promise to “Make America Great Again” has always gone hand-in-hand with an “America First” agenda, and tariffs have become a central weapon in his economic arsenal. But while these trade wars have disrupted global markets, for gold investors, they may hold a silver—or rather, golden—lining.

By Matthew Jones & Kane White | The Metal Minds

Tariffs: The Catalyst for Economic Ripples

At their core, tariffs are taxes on imported goods, and their effects ripple through the economy in fascinating ways. While they aim to protect domestic industries, the reality is that these costs often trickle down to consumers in the form of higher prices. For gold investors, however, this scenario presents an opportunity. Tariffs tend to generate economic uncertainty and inflation—two conditions under which gold historically thrives.

A lesser-discussed consequence of tariffs is their impact on the U.S. dollar. Trade restrictions and supply chain disruptions have a history of weakening the dollar, as was evident during Trump’s first term. A weaker dollar makes gold more affordable for international buyers, boosting demand and, in turn, pushing up prices.

The Domino Effect of Trade Wars

Tariffs rarely operate in isolation. When one country imposes them, trading partners often retaliate. This tit-for-tat escalation was on full display during Trump’s presidency, particularly in his dealings with China and the European Union. Tariffs on steel, aluminium, and Chinese goods sparked swift retaliation, with U.S. exports like soybeans, automobiles, and even whiskey facing countermeasures.

These trade wars disrupted global commerce, driving up costs for businesses and consumers on both sides. Inflation, once thought of as a dormant threat, reemerged with a vengeance.

Here’s why tariffs are an inflationary powder keg

Cost-Push Inflation: When tariffs raise the cost of imported goods, businesses often pass these expenses onto consumers. For manufacturers reliant on foreign materials, shrinking profit margins and higher consumer prices create a perfect storm of inflationary pressure.

Wider Economic Disruption

Retaliatory tariffs can cripple export-heavy industries and inflate domestic prices. For example, during the U.S.-China trade war, American farmers saw exports plummet, while everyday goods like electronics and food became more expensive for consumers.

Inflation as a “Sledgehammer”: Prolonged trade wars create cascading price hikes across industries, driving inflation to new heights. In this environment, gold’s historical role as a safe haven shines even brighter.

What This Means for Gold Investors

For those holding gold, trade wars and inflation provide a dual advantage. First, market uncertainty drives risk-averse investors toward the safety of gold. Second, as inflation eats away at the purchasing power of fiat currencies, gold’s intrinsic value becomes even more appealing.

Central banks often respond to inflation by raising interest rates, which can slow economic growth and even tip economies into recession. In these conditions, gold becomes an essential asset for preserving wealth and navigating volatility.

Trump’s tariff policies

Trump’s tariff policies—and the retaliatory measures they provoke—are a reminder of how economic volatility can fuel gold’s rise. History shows us that during times of inflationary pressure and geopolitical uncertainty, gold has consistently proven its worth as a reliable store of value. Those who hold gold during such periods are well-positioned to protect their wealth and weather economic storms.

This article is by precious metals experts and guest bloggers The Metal Minds: Matthew Jones & Kane White

Disclaimer: This article is for informational purposes only and does not constitute financial advice. The views expressed are based on my personal opinion and should not be taken as investment recommendations. Investing in precious metals 

Image by Pete Linforth from Pixabay