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The world of global trade is an intricate web of policies, negotiations, and economic consequences.

Among the most significant disruptions to this delicate balance in recent years have been the tariffs imposed by the Trump administration in 2018 and 2019.

While these tariffs were intended to protect American industries and reduce trade deficits, their ripple effects extended far beyond their immediate targets, influencing markets in ways few anticipated — one of the most striking being the impact on the price of gold.

Tariffs and the surge in uncertainty

Tariffs, by their very nature, create economic uncertainty.

The moment the US imposed tariffs on steel, aluminium, and a vast array of Chinese goods back in 2018 and 2019, the global economy felt the tremors.

Investors, historically wary of instability, turned to gold — long regarded as a safe-haven asset in times of crisis.

The heightened unpredictability surrounding trade policies led to increased demand, pushing its price upward.

The US-China trade war, fuelled by tit-for-tat tariff exchanges, further deepened economic anxieties.

Businesses faced supply chain disruptions, consumer prices saw fluctuations, and financial markets experienced volatility.

Amidst this period, gold stood as a beacon of stability, gaining value as investors sought refuge from the storm.

Inflation and currency fluctuations: a double-edged sword

One of the unintended consequences of tariffs is their potential to drive inflation.

As tariffs raised the cost of imported goods, businesses passed these costs on to consumers, leading to higher prices.

Inflationary pressures tend to bolster gold’s appeal, as the metal is widely seen as a hedge against inflation.

This dynamic played out in real time during the tariff wars, with gold prices reflecting inflationary concerns.

Furthermore, tariffs have significant implications for currency markets.

While in some cases tariffs can weaken a country’s currency due to economic strain, the US dollar — often seen as the world’s reserve currency — experienced a paradoxical strengthening.

This was partly due to investors flocking to the dollar as a safe-haven asset, alongside gold.

However, a stronger dollar can make gold more expensive for foreign investors, sometimes counteracting the metal’s price gains.

The gold rush of 2018–2019

The Trump administration’s tariffs in 2018 and 2019 offer a compelling case study in the complex interplay between trade policy and commodity markets.

As tariffs on Chinese goods escalated, so too did concerns over a global economic slowdown.

The price of gold surged during this period, driven by investors seeking to hedge against the uncertainty of prolonged trade disputes.

Meanwhile, retaliatory tariffs from China and other affected nations compounded trade tensions, amplifying market instability.

This reinforced gold’s role as a financial refuge, further solidifying its status as a barometer of global economic sentiment.

A balancing act with no easy answers

The impact of US tariffs on the price of gold underscores a broader truth about economic policy: no action exists in isolation.

While tariffs may serve short-term strategic goals — such as protecting domestic industries or reducing trade imbalances — their broader consequences can be unpredictable.

For investors and policymakers alike, understanding these ripple effects is crucial.

As the world grapples with ongoing trade tensions and economic realignments, gold will likely continue to gleam as a symbol of stability amidst the turbulence of policy shifts and financial upheavals.