US Tariffs’ Impact on Global Commodity Prices

The implementation of US tariffs under the Trump administration has created significant turbulence across global commodity markets, reshaping trade patterns and dramatically affecting prices worldwide.

How have US tariffs affected commodity prices around the world has become a central question for policymakers and businesses alike, as the impacts have been far-reaching—disrupting everything from industrial metals to agricultural products and energy commodities.

Overview of Tariff Implementation

Since taking office in January 2025, President Trump has implemented an extensive tariff regime that began with a baseline 10% US tariffs on most imports announced on April 2, 2025, with significantly higher rates for specific countries and commodities.

The tariffs have evolved throughout the year, with some reaching as high as 50% for steel and aluminum imports from most countries (excluding the UK). By August 2025, the US average effective tariff rate had reached 15.8%, a dramatic increase from 2.3% at the end of 2024.

Industrial Metals: Dramatic Price Volatility

Steel and Aluminum Markets

The metals sector has experienced some of the most dramatic impacts from US tariffs. Steel and aluminum tariffs, which doubled from 25% to 50% in June 2025, have created substantial market disruptions. The price differential between US and EU markets increased by 77% for steel and 139% for aluminum between February and May 2025. BCG estimates that the doubling of tariffs has added $50 billion in tariff costs for these metals alone.

These tariffs have triggered significant supply chain adjustments, with more investments in US capacity being formalized, including Emirates Global Aluminum’s plans for a new US facility and joint investments by Hyundai Steel and Posco in Louisiana. However, the increased costs driven by steel tariffs are being passed through to downstream industries, affecting construction, manufacturing, and other sectors that rely heavily on these materials.

Copper Market Chaos

The copper market has experienced extraordinary volatility due to tariff uncertainty. Initially, expectations of a 50% US tariffs on copper imports triggered massive speculation, with US copper futures surging 13% in a single day on July 8, 2025, reaching record highs above $12,445 per ton. The premium over London Metal Exchange prices reached a record $2,520 per ton, with potential to expand to $5,000 per ton.

However, the market experienced a dramatic reversal when Trump exempted refined copper from the 50% US tariffs at the last minute. This unexpected announcement triggered a historic 22% single-day collapse in US copper futures – the largest decline since at least 1988. The once-mighty premium US copper held over global benchmarks evaporated as months of speculative gains were unwound in hours.

Agricultural Commodities: Export Market Disruption

Soybeans and Grain Markets

Agricultural commodities have been severely impacted by the escalating trade war, particularly soybeans. The US-China trade tensions have resulted in 125% tariffs between the two nations, leading to an estimated 11.1% decline in US oilseed prices. China has imposed 10-15% US tariffs on US soybeans, corn, and beef, while seeking alternative suppliers primarily from Brazil and Argentina.

The impact mirrors the 2018-2019 trade war, when US agricultural exports to China plummeted, with losses exceeding $25 billion. Current projections suggest potential soybean export losses of over 25 million metric tons, with up to 90% of corn exports to China at risk. The World Bank forecasts soybean prices will tumble by 17% in 2025, while corn prices are expected to edge down by 2% in both 2025 and 2026.

Coffee, Cocoa, and Sugar

Soft commodities have also experienced significant disruption. The US imposed a 50% tariff on Brazilian coffee, sending robusta coffee futures to three-month highs as US roasters scramble for alternative supplies. Vietnam, facing 46% tariffs, could effectively lose its US coffee market due to the massive price disparities with Brazilian sources.

Cocoa markets have been similarly affected, with key producing nations facing substantial tariffs: 21% on Ivory Coast and 10% on Ghana. London cocoa futures dropped 1.7% following tariff announcements, while sugar prices have declined amid broader commodity market volatility.

Energy Markets: Reduced Demand Concerns

Oil Price Suppression

Oil markets have experienced downward pressure due to trade war concerns about reduced global economic activity. Brent crude has fallen to four-year lows of around $64-68 per barrel, representing a 12% year-to-date decline that correlates directly with escalating US-China tariffs. The International Energy Agency estimates a 2.4 million barrel-per-day reduction in global oil demand since January 2025, with approximately 60% attributable to reduced Chinese industrial activity.

The trade war mechanisms affecting oil prices include reduced manufacturing output, decreased shipping activity (with bilateral trade volumes down an estimated $156 billion annually), and currency effects as the US dollar index strengthened 6.3% in Q1 2025. Historical patterns show each 10% increase in tariff exposure correlates with a 4.7% decline in Brent prices.

Precious Metals: Safe Haven Dynamics

Gold and silver markets have shown contrasting responses to tariff announcements. Gold has demonstrated resilience as a safe-haven asset, experiencing a V-shaped recovery and reaching lifetime highs following tariff announcements. Single-day price swings exceeding $100 have become common, with increased hedging activity to manage unpredictable movements.

These trends highlight how have US tariffs affected commodity prices around the world, as precious metals continue to respond sharply to shifting trade policies and investor sentiment.

How have US tariffs affected commodity prices around the world is clearly visible in these trends, as silver has shown higher volatility, with prices jumping to $35 per ounce before falling to $28 per ounce due to US-China tariff developments. The precious metals markets have also experienced reduced arbitrage opportunities between major trading hubs and widened bid-ask spreads as market makers adjust for increased risk.

Consumer Price Impact

The tariff impacts extend directly to consumer prices across various sectors. The 2025 tariffs are expected to result in a 2.3% price level increase in the short run, equivalent to an average $3,800 consumer loss per household. Specific impacts include:

Clothing and textiles: 39% higher shoe prices, 37% higher apparel prices
Food prices: 3.2% increase in the short run, with fresh produce 7% more expensive
Motor vehicles: 12.4% increase in the short run, equivalent to an additional $6,000 for an average new car

Global Trade Flow Restructuring

The tariffs have fundamentally altered global trade patterns, forcing companies to reevaluate supply chains and seek alternative sourcing strategies. Countries like Brazil have capitalized on opportunities to increase agricultural exports to China, while other nations have formed strategic alliances to strengthen their positions in global commodity markets.

The restructuring has created both winners and losers: while some countries benefit from trade diversion effects, the overall impact has been to increase costs, reduce efficiency, and create substantial uncertainty in global commodity markets. How have US tariffs affected commodity prices around the world can be seen in this shift, as the effects are likely to persist even if tensions ease, with structural changes in supply chains and sourcing strategies shaping a new normal for global trade relationships.

The comprehensive impact of US tariffs on global commodity prices demonstrates the interconnected nature of modern trade systems and the far-reaching consequences of protectionist policies. While some domestic industries may benefit from reduced competition, the broader effect has been increased volatility, higher consumer costs, and significant disruption to established global supply chains across virtually all commodity sectors.

How have US tariffs affected commodity prices around the world