Where will Trump's trade with China lead commodities in 2025? Russell

In 2025, Donald Trump's return as U.S. president and China's stagnant economy will influence global commodity markets.

The only certainty is that there will be volatility, and many factors acting in opposite directions.

In 2025, it will be harder to predict the prices of major commodities, such as crude oil and liquefied gas, ore like iron ore, coal, and metals, such as copper.

Consider, for example, Trump's signature promise during his campaign: tariffs. Trump's threatened tariffs of up to 60% against China and 20% against all other countries could halt global economic growth and force a realignment in trade flows. They may also lead to inflation and tighten monetary policy.

It's also possible that none will happen if tariff threats are nothing more than a negotiating tactic. If Trump believes that he has achieved enough "wins", he may decide to forgo damaging policy decisions.

This means that traders are likely to take a wait and see approach for commodities such as iron ore and copper, which are most exposed. Daily headlines will likely lead to price volatility until the policy picture is clearer.

The first term of Trump's presidency has taught us that we should focus more on the actual work his administration is doing, rather than the non-stop and sometimes confusing messages from him and his supporters on social media.

Trump's first tenure also revealed that the act of negotiating a deal is more important to him than its actual content.

Look at his first tariffs on China. He still supports them, despite the fact that they have failed in nearly every way.

The trade deals did not lower the U.S.-China trade deficit, nor did they spark a manufacturing revolution in the United States. They also failed to generate much revenue and China fell far short of its commitments to increase massively the imports from the United States of crude oil, coal, and LNG.

If Trump's team learned from the experience, they may need to be more aggressive. Otherwise, the risk of a global trade war will increase, as well as the associated economic weakness.

The slow growth in China's economy has led to many people to believe that China is less prepared to handle a trade conflict with the United States than it was last year.

This is partly true, but China has many tools at its disposal to navigate a successful trade war.

It could harm the U.S. economic system by disrupting supply chain, selling a large amount of U.S. Treasury bonds, devaluing its own currency, boosting stimulus spending, and advancing its leadership in renewable energies technologies and installations.

China could also compensate for the loss of U.S. market access by increasing trade and investment with Europe and other regions that are generally referred to as "global South".

It's not certain that Trump's new administration will use these tactics. Much depends on the policies they implement once Trump is sworn into office on January 20.

It's important to look at current and possible trends that may play out by 2025.

Tariffs, Stimulus

It's almost certain, first of all, that Trump will impose tariffs in some form on imports to the United States.

It's not yet clear how damaging and large the tariffs will be, but we can say with certainty that they will have a negative impact on the global economy and put downward pressure commodities like crude oil, LNG, or iron ore.

In November, the factory activity in China grew at its fastest rate in five months. Beijing's stimulus will likely continue to grow if it continues in a moderate manner.

Iron ore, LNG and copper would all benefit. This may not be so positive for crude oil because China's rapid move towards electrification for light vehicles and LNG for trucks has started to reduce diesel demand.

China's increased price sensitivity as a buyer of commodities is a trend that will likely continue.

China's crude oil imports fell 2.1% in the first eleven months of the year, despite the expectations that demand would grow, according to organisations like OPEC and International Energy Agency.

China's refiners have also cut back on their imports, citing OPEC+ output cuts as a reason for the decline.

Overall, 2025 will be a year of high uncertainty. It is important to ignore Trump's rhetoric in favor of focusing on the actual policies implemented and the data.

These are the views of a columnist who writes for.

(source: Reuters)