As Trump prepares to take office, global markets are increasingly uncertain about his trade policies, particularly the expectation that he may impose high tariffs on imported goods. These policy signals have directly impacted the U.S. metals and oil markets, with prices surging and breaking traditional market benchmarks. This article analyzes the effects of Trump’s policies on the metals and oil sectors and the underlying logic behind these changes.

Anomalies in the Metals Market: Tariff Expectations Drive Premium Surge

Recently, COMEX silver and copper futures prices have risen sharply, far surpassing the benchmark prices on the London spot market. In the context of Trump’s impending inauguration, the market is increasingly concerned about potential tariff policies. COMEX silver futures have reached a premium of over $0.90/oz compared to London spot silver, nearing the peak seen in December last year. Meanwhile, COMEX copper futures prices have surged to a $623/ton premium over London Metal Exchange (LME) copper futures, approaching levels last seen during last year’s historic copper short squeeze.

These price fluctuations reflect heightened market anxiety. Investors widely believe Trump will increase tariffs on imported metals, particularly key minerals like copper and silver, after taking office. Trump has publicly stated his intention to impose tariffs as high as 60% on goods imported from countries like China. This expectation has led traders to increase their bets on the U.S. metals market, driving up prices.

According to Ole Hansen, the commodity strategy head at Saxo Bank, “At the beginning of this year, global investors started seeking protection against rising inflation and the uncertainty of Trump’s trade policies.” The spike in U.S. metals futures prices underscores the unpredictability of Trump’s policy actions.

However, this anomaly has also introduced risks. Normally, metals prices in New York and London fluctuate in sync, but the impact of Trump’s tariff policies has caused a significant decoupling between the two markets. While traders see significant arbitrage opportunities, they also face risks from potential price corrections.

Oil Market: Tariff Risks Extend to the Energy Sector

The oil market has also felt the impact of Trump’s anticipated policies. Expectations that the Trump administration may impose tariffs on energy products from Canada and other countries have pushed up U.S. crude oil prices, widening the price gap. Such tariffs could affect the profitability of U.S. refineries and further drive up domestic oil prices.

Concerns over potential disruptions in the energy supply chain have arisen ahead of Trump’s inauguration. The surge in oil prices reflects the market’s early response to these risks. There are predictions that Trump may impose a 25% tariff on oil imports from Canada, exacerbating supply and demand tensions in the U.S. market. Without immediate alternative supplies, U.S. consumers could face even higher oil prices.

This scenario presents challenges for the U.S. domestic oil industry. Although the Trump administration has denied plans to implement widespread energy tariffs, market anxiety remains. Rising oil prices not only pressure domestic consumers but could also disrupt the global oil supply chain.

Conclusion

Trump’s inauguration and his firm stance on tariffs have already begun to impact the global metals and oil markets significantly. The surge in metals premiums and oil prices indicates that markets are proactively reacting to the risks posed by Trump’s trade policies. While these changes offer arbitrage opportunities for some market players, they also pose significant risks for those without access to physical inventory.

As Trump formally assumes office, market uncertainty is likely to persist, and greater volatility in metals and oil prices can be expected. Investors should closely monitor the Trump administration’s policy developments and be prepared to respond to sudden market changes.