The prices of commodities like crude oil, copper and soybeans have dropped in response to President Donald Trump’s tariff announcements, indicating pessimism about where the global economy may be headed. Even though many commodities, like oil, were exempt from tariffs, the broader economic effects of tariffs are likely to take a toll if they continue.
Tariffs have cast a shadow on the upcoming planting season for Iowa soybean farmer Dave Walton: “It feels a bit like today; cloudy, overcast, gray,” he said.
Before this round of tariffs, Walton said that soybean prices were almost breaking even. “With that additional drop in price, it just creates more red ink, so we went from a break-even or a small loss to a larger loss.”
As for crude oil — the commodity of all commodities — new tariffs make U.S. consumer products pricier, according to Joe DeLaura, a senior energy strategist at Rabobank. That will cool the demand for fuel for transoceanic shipping and other transportation.
“Companies are just going to cut back on orders,” he said. “That’s going to decrease domestic usage of logistics, transportation and shipping.”
Gasoline demand could also take a hit. Consumers may be less likely to get in their cars and drive to the store.
“You’re not going to go shopping at Target if the $15 t-shirt costs you $30,” said DeLaura.
OPEC + is adding oil supply, which is also pushing down prices — lower prices that could hurt U.S. oil producers, said Ian Lange with the Colorado School of Mines.
“The shale revolution means we’re now big producers — the biggest producer — and so there’s sort of, like an extra negative impact right on the U.S. economy as a result of us being big producers of oil and gas when the price of oil and gas goes down,” he said.
In the world of metals, volatility has taken a toll on prices, per consultant Chris Berry of House Mountain Partners — including for copper, which was recently at a high.
“When you look at copper, it’s called the metal with the PhD in economics because it — generally speaking — is a pretty good predictor of economic growth in an economy,” he said. “If you’re going to lay higher costs into an economy, it’s going to hit copper prices in particular.”
In other words, a growing economy needs more copper, while a weakening one needs less.