In the most extraordinary turn of events, Trump’s tariff policy has sent tremors of epic proportions in the global market, wiping trillions of dollars from the market. First global equity market felt the brunt of Trump tariffs and retaliatory tariffs from other countries, and now commodities market feeling the heat of the ongoing trade war. Crude oil prices plummeted to their worse in more than 3 years and gold prices show record volatility. The gravity of these tariffs can be underscored by the fact that Apple dispatched five flights carrying iPhones from India and China to the U.S. in a desperate attempt to bypass the escalating tariffs.

On April 2nd, 2025, US President Donald Trump announced another round of tariffs in China, increasing the total tariff rate to more than 54% inclusive of previous duties. These tariffs have been imposed in the backdrop of perceived trade imbalances from US. In retaliation, China imposed an umbrella 34% tariff on all US goods, coming into effect from 10th April 2025 and further imposed export restrictions on the rare earth minerals.

Chinese administration moves to retaliate with complimentary tariffs shows the readiness and preparedness of China to endure this trade dispute. However, Trump has further threatened to impose 50% tariff on China if Beijing doesn’t withdraw the imposed retaliatory tariffs.

Amidst this chaos, S&P 500 lost USD 5.4 trillion in values in the last week while in the global market USD 9.5 trillion has been lost in this market turmoil.

Trade war Pushes Crude oil Prices in freefall
Crude oil prices saw a significant drop this week, declining by more than 18% from global benchmark levels due to a combination of new U.S. import tariffs and an unexpected rise in OPEC+ supply. On April 7th, WTI crude dropped below USD 60/bbl, while Brent crude fell below USD 64/bbl, marking their lowest points since August 2021. This decrease was largely driven by fears that President Donald Trump’s escalating trade war could trigger a global recession, thereby reducing energy demand. On the same day, Trump also threatened to impose an additional 50% tariff on China, set to take effect Wednesday, unless Beijing withdraws its retaliatory measures. Meanwhile, EU has proposed 25% counter-tariffs on a range of U.S. goods. Further contributing to the downward pressure were the planned OPEC+ production hike in May and Saudi Arabia’s decision to reduce official selling prices for the next month.


Then Came the Crash: Powell’s Hawkish Bombshell
Just when gold seemed unstoppable, a sudden and sharp reversal sent shockwaves through the market. On what is now being dubbed a "horror day" for commodities and equities alike, gold prices collapsed more than USD 75/ounce in a single trading session, closing at USD 3,038.34/ounce — down 2.44% in one day.

The catalyst? A surprisingly hawkish shift in tone from U.S. Federal Reserve Chairman Jerome Powell. Speaking at an event in Virginia, Powell cast doubt on the likelihood of near-term interest rate cuts. He emphasized that inflation, especially driven by unexpected new tariffs under the Trump administration, may linger longer than expected. Powell remarked that the tariffs were “bigger than expected,” with potentially larger consequences — higher inflation and slower growth — which sent tremors across global markets.

From a technical standpoint, gold is now at a critical juncture. The USD 3,000/ounce level, once a target, has become a key support zone. If this level breaks decisively, analysts see downside potential toward the USD 2,937, and possibly even further to USD 2,900.

On the upside, bulls will need to push past immediate resistance at USD 3,041 — a double top formation — and the strong USD 3,050 to USD 3,054 zone to regain control of the trend. For renewed bullish momentum, a break above USD 3,100 is crucial, though the road ahead looks increasingly volatile.

U.S. Tariffs Raise Costs for Domestic Metal Industry, Add USD 22B to Import Bill
Domestically, the tariffs are projected to add USD 22.4 billion to the cost of steel and aluminum products imported into the U.S., with an additional USD 29 billion for derivative products. Industries heavily reliant on these imports, such as automotive, machinery, and construction, are likely to face increased production costs. While U.S. steel and aluminum manufacturers might experience short-term benefits from reduced foreign competition, the broader economy could suffer from higher prices and potential retaliatory measures from trading partners.

For India, the U.S. tariffs present a dual challenge. Directly, India's exports to the U.S. are affected; in FY23, India exported USD 4 billion worth of steel and USD 1.1 billion worth of aluminum to the U.S. Indirectly, the tariffs may lead to an oversupply in global markets as countries redirect their exports, potentially resulting in increased dumping of steel into India. This scenario could depress domestic prices and impact local producers. Hui Ting Sim, Assistant Vice President at Moody's Ratings, noted that the U.S. tariffs would "increase competition and exacerbate oversupply at other steel-producing markets," posing challenges for Indian steel producers.

Automotive Industry Braces for Impact as US Tariff Burdens Production
The automotive industry has been dealt one of its harshest blows with the announcement of a 25% tariff on all foreign vehicle imports to the U.S. The tax, in addition to other tariffs already placed on steel, aluminium, and EU industrial products, sent shockwaves through automakers that depended on international supply chains. Combined with increasing interest rates and muted consumer confidence (the Conference Board's Expectations Index reached a decade low in March), U.S. carmakers are now caught in the difficult position of balancing cost pressure, dampened demand, and electric vehicle investment.

The auto industry is closely linked to a variety of chemical raw materials—most of which are impacted by such policy changes and market forces. Polybutadiene Rubber (PBR) and Styrene-Butadiene Rubber (SBR), which are synthetic rubbers used in tires and gaskets, are subject to price fluctuations caused by increased import duties and supply chain disruption. The rubbers usually come from Asia, particularly China and South Korea, so the imposition of new tariffs will tend to raise landed cost and cut margins for manufacturers.

What’s next for commodities?
For Gold, despite the recent correction, sentiment remains cautiously optimistic among many analysts. Goldman Sachs, for instance, has raised its year-end forecast for gold to USD 3,100/ounce, citing continued central bank demand and persistent macroeconomic risks as key drivers. However, not everyone is convinced that the bull run can continue uninterrupted. Some experts warn of a potential 10–15% correction if geopolitical tensions ease, inflation cools, or if the Fed maintains its hawkish stance longer than anticipated. Real interest rates rising would also dampen gold’s allure, creating headwinds for further gains. 

The impact of these low crude oil prices can be seen in the petrochemical market and other downstream enterprises. In terms of the petrochemical market, the feedstock products—namely Toluene, Benzene, and Xylene—may lower the production cost of the petrochemical derivative products. Rising trade tensions could result in slower industrial activity and further reduce oil demand, possibly driving prices even lower. Stocks of oil paint, aviation, and oil marketing companies (OMCs) are likely to remain under pressure as crude prices weaken and OPEC+ moves forward with its plan to increase production.

The U.S. tariffs on steel and aluminum have set off a chain reaction affecting global markets, with significant implications for countries like India and various sectors within the U.S. economy. The potential for increased competition, market oversupply, and retaliatory measures underscores the interconnected nature of global trade and the far-reaching consequences of protectionist policies.

The U.S. and the World Brace for Uncharted Challenges
Trump’s trade tariff turmoil has put inflationary pressure on the US economy by increasing prices of both imported as well as domestic goods. These tariffs will raise prices due to higher production cost and increased demand for local goods, noted JPMorgan Chase CEO Jamie Dimon. However, tariffs are likely to hinder economic growth as US economy carries the risk of entering a recession by the end of this year and consequent potential job losses, as per several forecasts.

Meanwhile, Asian and European countries may face deflationary pressures due to reduced export demand which in turn increase the supply and drive the price downwards. India and China are likely to bear the brunt of this situation. The ongoing tariff dispute has put the pressure on the diplomats to strategically carve a niche for their countries and mitigate the impact of US tariffs from the US. The overall impact will largely depend on how each country respond to these tariffs and subsequent trade policies.

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