Amidst a powerful wave of tariffs unleashed by US President Donald Trump, plunging global trade into the shadow of anticipated inflation and recession, gold stands resilient against his economic decisions.
It remained untouched by customs duties, a move that has raised questions about why it was exempt from the increases Trump intends to use, in order to strengthen his country’s economy at the expense of others.
This comes at a sensitive time in history, prompting many people worldwide to invest their money in the yellow metal to safeguard against losses.
The advisor to the Minister of Supply for Gold Affairs, Nagi Farag, states that all countries strive to increase their strategic gold reserves to counter inflation and maintain currency value.
He considers Trump’s decision to exempt the “safe haven” asset from customs duties a pivotal step within his administration’s efforts to achieve greater stability in financial markets.
According to Farag, gold is one of the most prominent hedging assets against economic recession, and its exemption reflects a clear desire to attract more investment into the gold market, thereby contributing to increasing the US reserve of the precious metal.
Farag added that the US possesses one of the largest global gold reserves, amounting to 8,331 tons according to previous statements by Trump during a press conference last February.
He pointed out that the US President seeks to increase his country’s strategic reserve to 9,000 tons to ensure the stability of the central bank and lend more strength to the dollar.
This reflects his economic policies aimed at improving the country’s financial situation, especially in the face of global uncertainty that makes gold an essential component in achieving financial stability for the state and protecting it from market fluctuations.
Consequently, imposing customs duties on gold would lead to adverse results and severe economic consequences, which Trump certainly understands, hence his exclusion of it from the trade war he launched against the world.
The Director-General of the International Center for Economic Consultations and Feasibility Studies, Hoda al-Mallah, stated that Trump’s decision to impose tariffs on countries worldwide proves that he is not well-versed in economics and lacks truly economically astute advisors, because this step will lead to higher prices globally – with gold prices at the forefront.
Mallah added that oil prices are expected to increase, leading to a global rise due to the imposition of tariffs, marking the second step in hitting global prices.
The first occurred when the Federal Reserve raised interest rates, a move followed by the rest of the world.
Trump did not exempt gold from his global tariffs because gold already had existing customs duties, Mallah clarified, explaining that he only refrained from increasing the tariff rate on gold.
She pointed out that prices will rise by the same value as the tariff, and this increase will be borne by the consumer, noting a decrease in demand for gold due to its higher prices.
An economic expert and member of the Egyptian Society for Political Economy, Statistics, and Legislation, Yasser Shweita, stated that a White House document indicates that the retaliatory tariffs do not apply to certain goods, namely gold, energy, and minerals not found in the US.
Therefore, gold was exempted from the new tariffs.
He added that this is because gold is a commodity not found in the US, and also to prevent all industries related to these goods from being affected.
Consequently, the US can easily obtain them from producing countries without those nations imposing restrictions on them.
The former Dean of the Faculty of Economics and Political Science at Cairo University, Aliaa al-Mahdi, believes that Trump decided to exempt gold from tariffs because countries strive to hold gold in their reserves.
She added that the US President wants the largest possible quantity of gold to enter America, and therefore worked to exempt it from customs duties.
An economic researcher and member of the Egyptian Society for Political Economy, Statistics, and Legislation, Ahmed Abu Ali, stated that all central banks in the world, funds, and even citizens have turned to investing in gold due to the tariffs imposed by Trump globally.
This has been showcased in gold prices, as gold is the only investment that enjoys very high levels of demand.
He added that Trump cannot impose a customs tax on gold because it operates within a global framework and its movement is dictated by the global gold exchange. He clarified that the tariffs are not on specific goods but rather on countries, and the majority of countries currently hold gold reserves.
Trump on Friday announced the imposition of new, broad-based tariffs on goods imported from countries around the world, starting from April 5.
During his announcement of the decision, which he described as “a new American Liberation Day,” he stated that the basic 10 percent tariff imposed on all countries, in addition to higher rates for some nations, will boost the American economy and reduce unemployment levels.
According to CNBC’s definition, tariffs are additional taxes imposed on goods imported from other countries, used as a weapon by major powers and often determined based on the price of the commodity.
However, due to certain political orientations, they are often directed towards specific countries with the aim of harming their economies.
Trump argues that the new tariffs will encourage American consumers to buy more goods manufactured in the US, which will boost the country’s economy and increase the amount of taxes collected to be used for the development of the American national income.
This includes imposing a 54 percent tariff on imports from China (including the existing 20 percent tariff), 49 percent on products from Cambodia, and 46 percent on Vietnamese imports.
Tariffs will also be imposed on goods from the European Union at a rate of 20 percent, with the higher tariffs scheduled to take effect on April 9.
