Trade War Sparks Concerns in Commodity Markets
Trade tensions are on the rise as the United States implements tariffs on imports from Canada, Mexico, and China. Last week, 25 percent of goods imported from Canada and Mexico faced tariffs, while China saw a 10 percent tariff increase on its imports. These actions have raised concerns about potential trade wars and disruptions in global trade.
President Trump recently announced exemptions in tariffs, allowing goods under the US-Mexico-Canada Agreement (USMCA) to be exempt from tariffs until April 2. Despite the uncertainties surrounding government policies, the US economy continues to be in a good place, according to US Federal Reserve Bank President Jerome Powell.
In the financial markets, non-agricultural employment increased by 151 thousand people in February, but the unemployment rate also saw a slight rise. Bond interest rates and the dollar index remained relatively stable.
Trump also threatened Russia with banking sanctions and customs tariffs due to ongoing conflict in Ukraine, further adding to geopolitical tensions.
The price of gold rose last week, supported by a weakened dollar index, while silver, palladium, and platinum also saw price increases.
In China, copper imports fell by 7.2 percent in the first two months of the year, impacting pricing in base metals. Manufacturing PMI data in China and the euro zone showed positive growth, affecting the performance of base metals in the market.
OPEC+ countries’ decision to gradually increase oil production led to concerns about an oversupply of oil in the market, pushing prices lower. Natural gas prices rose due to cold weather conditions in Asia and the European Commission’s proposal to extend natural gas storage targets.
Agricultural commodities felt the impact of trade tensions between the US, China, and Mexico, with tariffs and restrictions affecting prices. Wheat prices were also affected by concerns of potential grain export restrictions from Russia.
Overall, various commodities experienced price fluctuations last week, influenced by geopolitical tensions, trade disputes, and supply and demand dynamics in the global market.
