Gold surged, stocks slid as Trump doubled metal tariffs

·       Trump unexpectedly hiked steel & aluminum tariffs from 25% to 50% in a late Friday political rally, which may cause a supply shock for the US and a price rise

·       Trump may soon scale back his 50% metal tariffs as the US can’t replace imports due to production constraints

·       China accused the US of violating the Genève agreement violation of tariffs in response to Trump’s Friday allegation that China was violating the tariff pause deal

On Friday, May 30, 2025, Wall Street Futures recovered from the panic low triggered by Trump’s China deal agreement violation, as Trump administration officials and Trump himself downplayed any serious issues. Trump said he expected talks with his Chinese counterpart, Xi Jinping, following accusations that China breached a trade deal about rare earth materials export restrictions.

Fast forward, to late Friday, May 30, 2025, after Wall Street closed for the weekend, President Trump delivered a public address at U.S. Steel Corporation’s Mon Valley Works–Irvin Plant in West Mifflin, Pennsylvania, emphasizing his vision for a “Golden Age of America” centered on revitalizing American manufacturing. Speaking to over 1,600 attendees, including Bessent and other White House officials, steelworkers, and die-hard supporters, Trump announced a doubling of steel import tariffs from 25% to 50%, effective June 4, 2025, to protect the domestic steel industry. He highlighted a $14 billion partnership between U.S. Steel and Japan’s Nippon Steel, ensuring U.S. Steel remains American-owned while lauding Nippon as a “great partner.” The address underscored Trump’s “America First” trade policies, aiming to restore manufacturing jobs lost under prior administrations.

Trump declared, “We don’t want America’s future to be built with shoddy steel from Shanghai, we want it built with the strength and the pride of Pittsburgh,” framing the tariff hike and partnership as steps toward economic greatness. He linked the steel industry’s revival to his broader “Golden Age” narrative, promising prosperity through protectionism. The event, held in a swing state key to his 2024 victory, featured American flags and a “The Golden Age” sign, reinforcing his vision of industrial resurgence. However, Nippon’s Vice-Chair Takahiro Mori noted the deal awaited final U.S. government approval, and Japan’s trade negotiator Ryosei Akazawa indicated no official confirmation had been received, highlighting diplomatic sensitivities.

Trump’s ‘Golden Age’ address avoided direct mention of his earlier Truth Social post on May 30, where he accused China of violating a trade agreement, but his focus on domestic steel production implicitly countered reliance on Chinese imports.

Highlights of Trump’s comments at the US Steel event (after the market hours):

·       Releases budget proposal for fiscal year 26

·       Celebrating agreement for US Steel

·       US Steel to remain an American Company

·       Japan is a great friend of mine

·       US Steel will have a strong ally

·       US Steel will have a strong partner with Japan’s Nippon Steel

·       US Steel to remain an American company

·       Japan has been a great ally of mine

·       Trump thanks Nippon Steel Vice Chair

·       US Steel to Retain Headquarters in Pittsburgh

·       US Steel CEO Asks for Assistance to Save Company

·       Tariffs shielded us from External Influence

·       Tariffs protect US steel from dumping

·       Tariffs safeguarded us from external control

·       Considers tariffs after meeting with United States Steel CEO

·       Trump commends Bessent for excellent work following the declaration of the US as the hottest country

·       The Rust Belt could become part of the 'Golden Dome

·       Budget proposal: revenue, deficit impact not included

·       Nippon Steel Persistently Requested from the President

·       Nippon Steel Wanted It

·       US Steel to retain control

·       Great relationship with Japan

·       Expect a positive rapport with Japan

·       Matter of National Security

·       Trump highlights 2018 steel duties

·       China dumps steel across the United States

·       No steel mill left without tariffs

·       China was flooding the US steel market

·       China and others dumping steel on the US was a terrible thing

·       Without tariffs, a steel mill would no longer exist

·       China, others dumping steel on the US was a 'terrible' thing

·       Trump: would not allow US steel to be sold overseas without protections

·       Biden administration tariff waivers resulted in job losses

·       Today, I have a significant announcement

·       Plans 25% hike on steel tariff

·       Imposing a 25% rise in steel tariff

·       Increasing Steel Tariff to 50%

·       Steel tariffs to protect the US steel industry

·       A 50% tariff means no one can surpass the "barrier"

·       Steel tariffs to protect the US steel industry

·       No one is going to avoid" steel tariffs

·       Trump asks the group whether to do 40% or 50%

·       Increase United States steel import tariffs to 50%

·       Group' tells him to do 50%

·       Avoid poor-quality steel from Shanghai

·       Trump to acquire billions worth of new equipment here

·       I love the word ‘duty’ so much for 40 years on end

·       Tariff is the Preferred Term in Vocabulary

·       $14 billion commitment to United States Steel from Nippon Steel

·       Nippon Steel to invest $2.2 billion to boost US production

·       Avoid poor-quality steel from Shanghai

·       Arkansas, Minnesota, and Indiana to receive investment

·       Plans to receive billions worth of new equipment here

·       I adore the term tariff greatly, for 40 years on year

·       Another 7 billion dollars to modernize steel mills, expand ore mines

·       Nippon Steel to invest 2.2 billion to boost US production

·       Nippon Steel commits $14 billion to US Steel

·       All steelworkers will retain jobs in the United States

·       All facilities will stay open

·       US Steel: maintains the operation of blast furnaces

·       Commitment to blast furnaces for a decade

·       Next week, steel import tariffs double to 50%: White House

·       Blast furnaces for a 10-year commitment

·       Another 7 billion to modernize steel mills, expand ore mines

·       US Steel to Keep Operating Blast Furnaces

·       Every United States steel worker to receive a $5000 bonus soon

·       Steelworkers' desires are not to produce chips

·       US Steel is to be controlled by the United States

·       Confidence in the group leading the Steel Pact

·       Trump reiterates admiration for Apple, NVIDIA investments in the US

·       Mortgage Rates and Gas Prices Decrease

·       Needs to get a tax bill passed

·       On the verge of passing the largest working-class tax cuts

·       The tax bill will maintain income tax at the current rate

·       We will have an amazing alliance

·       We are on the brink of passing the biggest working-class tax cuts

·       US-made cars to be made with US-made steel

·       The tax bill includes spending reductions

·       Trump urges supporters to encourage senators to vote for the tax bill

·       Reducing drug costs by 85% to 90%

·       US cars would be made with US steel

·       The tax bill includes cuts to expenditure

·       Trump confirms will increase tariffs on steel, aluminum to 50%

·       It is my great honor to raise the Tariffs on steel and aluminum from 25% to 50%, effective Wednesday, June 4th. Our steel and aluminum industries are coming back like never before. This will be yet another BIG jolt of great news for our wonderful steel and aluminum workers. MAKE AMERICA GREAT AGAIN!

·       We don’t want America’s future to be built with shoddy steel from Shanghai—we want it built with the strength and the pride of Pittsburgh!

·       Yet to Approve Final Deal with Japan

·       Japan Wants to Make a Deal with the US

·       Pakistan representatives are coming in next week

·       Chinese students coming to the US will be fine

The potential impact of Trump’s 50% metal (steel & aluminum) tariffs (from 25%) on the US economy

Trump doubled down on his metal tariffs from 25% to 50% in his May 30 political address without any previous indication. Trump said he has decided after consultations with representatives of steelworkers. The potential impact would have multifaceted effects on the U.S. economy.

Ø  Short-Term Effects:

Increased Costs for Domestic Manufacturers

·       Higher tariffs on imported metals like steel and aluminum would raise input costs for U.S. downstream industries such as automotive, construction, and machinery. 

·       According to some analyses, 2018 tariffs (25% on steel, 10% on aluminum) already increased U.S. steel prices by about 25% compared to global prices. Doubling tariffs to 50% could further inflate costs, reducing competitiveness for manufacturers reliant on imported metals. 

·       MSMEs, which lack the bargaining power of large corporations, may face disproportionate cost increases.

Higher Inflation

·       Rising metal prices would likely pass through to consumers, increasing the cost of goods like cars, appliances, and construction materials.

·       Some estimates suggest that broad tariffs could raise U.S. consumer prices by 0.5–1.5%, with metal tariffs contributing significantly due to their downstream effects.   

·       Inflation could strain household budgets, particularly for lower-income families, reducing discretionary spending.

Job Creation in Protected Industries 

·       Tariffs could temporarily boost domestic metal producers (e.g., steel mills) by shielding them from cheaper foreign competition. 

·       As per some estimates, the 2018 tariffs led to an estimated 1,000–2,000 new jobs in the U.S. steel industry.

·       A 50% tariff might amplify this, but gains would likely be limited due to automation in modern steel production.

Supply Chain Disruptions 

·       Higher tariffs could disrupt global supply chains, as companies scramble to source metals domestically or from non-tariffed countries. 

·       This could lead to delays and higher logistics costs, particularly if domestic production cannot meet demand. For example, U.S. steel production capacity was only at 80% utilization in 2024

 

Ø  Long-Term Effects:

Reduced Economic Growth 

·       Tariffs often reduce GDP by increasing costs and disrupting trade. 

·       As per some estimates, a broad tariff increase could reduce U.S. GDP by 0.7–1.2% over the long term.

·       Metal tariffs, as a subset, could contribute to this by dampening manufacturing output and exports. 

·       Retaliatory tariffs from trading partners (e.g., Canada, Mexico, and the EU) could further harm U.S. exporters, as seen in 2018 when the EU imposed retaliatory tariffs on U.S. goods like whiskey and motorcycles.

Trade Diversion 

·       Countries like Canada and Mexico, major U.S. metal suppliers, might face significant barriers, leading to trade diversion to non-tariffed nations (e.g., Brazil and South Korea). 

·       This could increase global metal prices and reduce the efficiency of U.S. supply chains.

Impact on Geopolitics

·       Higher tariffs could strain diplomatic ties, particularly with allies like Canada, Mexico, and the EU, which supply significant portions of U.S. metal imports. 

·       Retaliation could escalate into broader trade wars, as seen in 2018–2019, reducing U.S. access to global markets.

Limited Job Gains vs. Losses 

·       While tariffs may protect some jobs in primary metal industries, downstream (secondary) industries (e.g., automotive, construction, industrial) could face job losses due to higher costs and reduced competitiveness.

·       Estimated that the 2018 tariffs led to a net loss of 75,000 U.S. jobs due to downstream effects. A 50% tariff could exacerbate this imbalance.

Broader Economic Considerations:

·       Federal Revenue:  Tariffs could increase government revenue short term (e.g., $9 billion from 2018 tariffs), but this may be offset by reduced economic activity and tax revenue from affected industries.

·       Global Competitiveness: Higher costs could make U.S. goods less competitive internationally, reducing exports and long-term growth.

In summary, doubling metal tariffs to 50% would likely protect a small number of jobs in the US steel and aluminum industries, but at a significant cost to the economy, from downstream industries, to consumers, and economic growth. Inflation, supply chain disruptions, and retaliatory tariffs could amplify these effects, potentially leading to a net negative impact on the U.S. economy. Policymakers would need to weigh these trade-offs carefully, considering exemptions or targeted support for affected industries. Trump’s tariff policy aims to protect U.S. steelworkers and the domestic steel industry, but is expected to significantly increase prices for metal-dependent goods like housing, automobiles, and appliances.

Potential Impact of Trump’s 50% metal tariffs: May result in supply shock and price increase

The U.S. relies heavily on imports to meet steel (23% of consumption) and aluminum (~50% of consumption) demand, with 2024 totals at 97 million MT and 9.7 million MT, respectively. Domestic production costs are higher than global averages, and 50% tariffs will further inflate landed costs, potentially reducing imports while increasing domestic prices. Exports, primarily scrap, are significant but may decline in 2025 due to domestic demand and potential retaliatory tariffs by other affected countries. Trump announced an increase in tariffs from 25% to 50% on both steel and aluminum imports, effective June 4, 2025. This applies to all steel and aluminum products entering the U.S. The policy extends the existing 25% tariffs on steel and 10–25% tariffs on aluminum, unifying them at 50% to protect U.S. metal industries. The U.S. imported 28.86 million MT (MMT) of steel (valued at around $33.15 billion) and 4.9 MMT of aluminum (valued at around $28.31 billion) in 2024.

Canada, Brazil, and Mexico are the top three metal (Steel + Aluminum) exporters to the US, which may be impacted meaningfully. But big Asian producers like China (almost 50% of global production), Japan, South Korea, Vietnam, and even India, the world’s 2nd largest steel producer (~140.2 MMT) after China, may not be impacted significantly as these countries export a minimal percentage of their overall domestic production. These countries are now focusing on the US alternative and domestic markets since Trump's Metal tariffs 1.0 in 2018. China may now be using Canada, Mexico, Brazil, and Vietnam as direct/indirect proxies for metal exports/transshipments to the US.

Trump 1.0 metal tariffs of 25% are already acting as a barrier for US steel & aluminum imports, as landed cost is above or at par with domestic production cost. Trump 2.0 metal tariffs of 50% would act as an embargo. But considering various US constraints like raw material (iron ore, steel scrap, bauxite & alumina), adequate energy (insufficient coal supply), and infra & logistical gap, the US can increase domestic steel production by only around 2.5 MMT against an import/export gap of around 13.5 MMT. Similarly, the US can increase Aluminum production by around 0.25 MMT against an import/export gap of around 3.60 MMT.

In summary, Trump’s 50% steel & aluminum tariffs, if implemented at face value, may result in severe supply shock for the US seco9nday industries, which can push the steel price to around $1200/MT vs $1000/MT at present and Aluminum price to almost $3400/MT vs $3275/MT at present as base case scenario.

The U.S. also exported 16.1 MMT of metal scrap (primarily steel and iron scrap, with significant aluminum and copper scrap) in 2023, valued at $6.75 billion. But Trump’s 50% tariffs on metal imports (effective June 4, 2025) may indirectly affect US scrap export markets. Higher domestic metal prices in the U.S. could reduce scrap availability for export, as domestic steelmakers like Nucor and ArcelorMittal prioritize local consumption. This may lower export volumes to countries like Turkey and Mexico, while high-value markets like Switzerland (for gold) remain less affected.

Turkey, Mexico, and China are the top importers of U.S. metal exports, primarily steel scrap, followed by India and Canada. The U.S.’s role as a leading steel scrap exporter (17.5 million MT globally in 2022) underscores its importance in global recycling markets; most of the developed countries export steel scrap for melting & recycling in foreign (EM) countries to avoid pollution hazards.

 

The 50% import tariffs may indirectly reduce export volumes by increasing domestic demand for scrap, particularly affecting Turkey and Mexico. Turkey is the largest importer of U.S. steel scrap, driven by its steel production via electric arc furnaces, which rely heavily on scrap. In 2022, Turkey imported 21 MMT of steel scrap globally, with the U.S. supplying a significant portion. Mexico is a major destination for U.S. steel scrap ($1.1 billion in 2021) and aluminum scrap, driven by its automotive and construction industries amid US proximity and USMCA trade agreements.

China also imports significant U.S. copper and aluminum scrap for manufacturing and electronics, with steel scrap playing a smaller role due to domestic production. India imports U.S. steel scrap (and gold scrap for refining and manufacturing. Canada imports U.S. aluminum scrap for beverage cans and construction, and steel scrap for manufacturing, benefiting from USMCA trade ties. In short, domestic production constraints and potential retaliatory tariffs may also impact US exports of metal scrap to the rest of the world.

Conclusions

The U.S. cannot dramatically ramp up steel and aluminum production to avoid a supply shock from 50% tariffs due to raw material constraints, energy shortages, and infrastructure gaps. A modest production increase is feasible but insufficient to close import-export gaps, leading to price hikes and downstream disruptions. Trump’s 25% metal tariffs since 2018 didn’t eliminate US import dependency on metals, but the overall situation was in balance, comparing US steel & aluminum production costs and other constraints.

Bottom line

Trump may again flip-flop off his 50% metals tariffs, as it was not economically viable/feasible and purely politically motivated in a swing state.

Market impact

In early Asian/European session Monday, June 1, 2025, Wall Street Futures slid on Trump’s doubling down on metal tariffs from 25% to 50% and China’s counter-accusations to the US about the Geneva deal violation, and vowed to take measures to defend its interests. Trump’s 50% steel tariffs triggered a sharp rally in US steel-related stocks during premarket trading, led by Nucor Steel Dynamics and Cleveland-Cliffs, while U.S. Steel Corp slipped slightly due to the Nippon JV progress issue. Secondary steel & aluminum users such as automobiles, construction, industrial/machinery, and consumer durable goods may suffer. Gold, Silver, and Copper surged, while the USD slumped. Oil surged as the OPEC+ production hike was lower than expected.

Weekly-Technical trading levels: DJ-30, NQ-100, and Gold

Looking ahead, whatever the fundamental narrative, technically Dow Future (CMP: 42200) now has to sustain over 41900-41700 for a further rally towards 42000/42500-43000/43300* and 43500*, and even 44600-45200 in the coming days; otherwise sustaining below 41700, DJ-30 may again fall to 41000/40600-4010039900 and 39700/38600-38000/37700-37300/37000 in the coming days.

Similarly, NQ-100 Future (21200) has to sustain over 21000-20800 for a further rally to 21100/21400-21700*/22000* and 22400-22600 in the coming days; otherwise, sustaining below 20750/20600-20500/20400, NQ-100 may again fall to 20000/19600-19400/19200 and 19100/18800-18600/18100-17600/16400 and 16200-15800 in the coming days.

Also, technically Gold (CMP: 3360) has to sustain over 3375 for a further rally to 3405/3425*-3450/3505*, and even 3525/3555 in the coming days; otherwise sustaining below 3365, Gold may again fall to 3340/3320-3300/3280 and 3255/3225-3200/3165* and further to 3130/3115*-3075/3015-2990/2975-2960*/2900* and 2800/2750 in the coming days.