Spot gold hit a new record: US$3,167.57/oz on Thursday +19% year-to-date | +71% since end-2022 Key Takeaways: Trump’s Return Drives Structural De-Dollarisation Central banks are shifting reserves away from the US dollar and Treasuries due to: Tariff escalation and trade wars Unpredictable foreign policy (Ukraine, alliances) Concerns over long-term USD stability Quote: “Uncertainty about US economic policy will remain for years to come.” – Michael Widmer, BofA Central Bank Buying Already Surging Q4 2024: Purchases up 54% year-on-year to 333 tonnes (World Gold Council) Emerging market central banks currently hold around 10% of reserves in gold; BofA suggests a target of 30%, implying: 11,000 tonnes of potential future demand Demand Outlook: Stronger and Stealthier 2025 may see record-high central bank demand in decades Only 34% of estimated 2024 buying reported to IMF — suggesting undisclosed accumulation to avoid political friction with US Quote: “Trump has threatened tariffs on countri...
The Trump administration is preparing a sweeping tariff package that may mark the most aggressive protectionist turn in US history since the 1930s. Markets are watching closely as risks of recession, inflation, and global retaliation mount.
Policy Overview
President Trump is poised to unveil a new round of “reciprocal tariffs”, possibly as soon as Wednesday, which would target countries with trade barriers or tax structures deemed unfair to US exporters.
Tariffs could raise average US import duties by up to 28 percentage points — the most since the 1800s.
The plan would replace the US’s long-held multilateral trade commitments under GATT/WTO with bilateral arrangements.
Key trading partners including Europe, China, Canada, and Southeast Asia are expected to be affected.
Economic Impact Forecasts
Bloomberg Economics projects a 4% hit to US GDP over 2–3 years under a maximalist scenario—more than $1 trillion in output lost.
Consumer prices could rise 2.5%, compounding existing inflation pressures.
Investment confidence is deteriorating, with bookings at logistics firms already down significantly.
Market and Policy Response
US equities underperformed in Q1, with the S&P 500 entering correction territory.
ECB President Christine Lagarde has warned EU leaders to prepare for a “worst-case” trade scenario.
The Fed cut its 2025 US growth forecast from 2.1% to 1.7% even before the tariffs were confirmed.
OECD and Moody’s now place the US back on recession watch.
Business Sentiment Split
Steelmakers and some US brands support the plan, citing unfair competition.
Multinationals and retailers (e.g., Tesla, JM Smucker, DataDocks) are warning of cost escalation, supply chain disruptions, and retaliation risk.
Consumer sentiment has fallen to its lowest in over two years.
Strategic Context
Trump’s strategy mirrors the 1930 Smoot-Hawley tariffs, which deepened the Great Depression.
The proposed tariffs aim to offset revenue losses from planned tax cuts, while reshaping US trade relationships.
Officials claim tariffs will attract $2T in investment and raise $700B in revenue, but long-term effectiveness is debated.
Key Takeaways
Tariff escalation could trigger a global slowdown and introduce volatility across supply chains, FX, equities, and commodities.
US companies face higher input costs, rising consumer backlash abroad, and investment delays at home.
Reversal of decades of multilateralism marks a turning point in global trade governance.
Markets should prepare for higher uncertainty, slower growth, and potential retaliation-led stagflationary pressures.
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