{"id":16088,"date":"2025-04-03T13:15:42","date_gmt":"2025-04-03T13:15:42","guid":{"rendered":"https:\/\/wifamily.news\/?p=16088"},"modified":"2025-04-06T16:03:40","modified_gmt":"2025-04-06T16:03:40","slug":"analysis-commodities-interest-rates-collapse-after-president-trumps-reciprocal-tariffs-announcement","status":"publish","type":"post","link":"https:\/\/wifamily.news\/?p=16088","title":{"rendered":"Analysis: Commodities, Interest Rates Collapse After President Trump\u2019s Reciprocal Tariffs Announcement"},"content":{"rendered":"

This post originally appeared at https:\/\/thestarnewsnetwork.com\/2025\/04\/03\/analysis-commodities-interest-rates-collapse-after-president-trumps-reciprocal-tariffs-announcement\/<\/a><\/p>\n

<\/div>\n
by Robert Romano<\/h5>\n

\u00a0<\/p>\n

Commodities prices and interest rates collapsed across the board following\u00a0President Donald Trump\u2019s Wednesday\u00a0announcement of reciprocal tariffs<\/a>\u00a0on U.S. trade partners despite Congressional Democrats\u2019 predictions that inflation would increase as a result of the tariffs.<\/p>\n

Crude oil<\/a>\u00a0went from $72.22 prior to the announcement down to $66.12 per barrel as of this writing, a 8.4 percent decrease.<\/p>\n

Hot rolled coil steel<\/a>\u2019s June contracts went from $822 to $817 per short ton, a 0.6 percent decrease.<\/p>\n

Wheat<\/a>\u00a0went from 540\u20190 cents per bushel to 539\u20190, a 0.2 percent decrease.<\/p>\n

Corn<\/a>\u00a0started at 458\u20194 cents per bushel, dropped very significantly to 450\u20194, but has recovered to 460\u20194, a slight 0.4 percent increase, relatively unchanged.<\/p>\n

Gold<\/a>\u00a0went from $3,133.30 an ounce down to $3,069.80, a 2 percent decrease.<\/p>\n

Silver<\/a>\u00a0went from $34.64 an ounce down to $32.11, a 7.3 percent decrease.<\/p>\n

Live cattle<\/a>\u00a0from 207.35 cents per pound down to $205.67, a 0.8 percent decrease.<\/p>\n

Soybeans<\/a>\u00a0went from 1025\u20190 cents per bushel down to 1007\u20194, a 1.7 percent decrease.<\/p>\n

It\u2019s across the board for the most part. There are some exceptions.\u00a0Natural gas<\/a>, for which demand including for electricity remains high, edged up slightly from $4.076 per MMBtu to $4.146, a 1.7 percent increase.<\/p>\n

But we can see the overall trend is actually lower prices, not higher prices. The reaction to tariffs is not to buy and bid up commodities, increasing inflation, it\u2019s the opposite which is to sell them. Keep that in mind.<\/p>\n

And it is happening to interest rates \u2014 another very reliable gauge of inflation expectations \u2014 with\u00a010-year treasuries<\/a>\u00a0dropped from 4.2 percent to 4.01 percent.\u00a02-year treasuries<\/a>\u00a0did the same thing, falling from 3.91 percent prior to the announcement down to 3.72 percent.<\/p>\n

All this is the exact opposite of what Democrats were predicting would happen as a result of the tariffs.<\/p>\n

On just March 2,\u00a0Senate Minority Leader Chuck Schumer (D-N.Y.) boldly predicted<\/a>, \u201cPresident Trump\u2019s tariffs are going to raise prices on families by as much as $1,200 per year.\u201d<\/p>\n

On March 11, just yesterday,\u00a0Schumer declared<\/a>, \u201cinflation has gone up under Donald Trump, from groceries to retail to cars.\u201d (See below: Both groceries and cars didn\u2019t experience any price increases in February, the first full month of Trump\u2019s presidency.)<\/p>\n

On Feb. 1,\u00a0House Minority Leader Hakeem Jeffries (D-N.Y.) similarly suggested that prices would go up<\/a>, stating, \u201cThe tariffs imposed by the administration and strongly supported by House Republicans will not lower the high cost of living for everyday Americans. Instead, it will likely do the exact opposite and make life more expensive.\u201d<\/p>\n

On March 3,\u00a0Sen. Elizabeth Warren (D-Mass.) also projected price hikes<\/a>, saying, \u201cDonald Trump promised on \u2018Day 1\u2019 to lower costs, but instead working families now have to worry about giant corporations using his haphazard tariff announcements as an excuse to raise prices \u2013 and the Trump Administration has no plan to stop it.\u201d<\/p>\n

None of it was true, though. In February, consumer inflation dropped from\u00a03 percent annualized in January<\/a>\u00a0to 2.8 percent,\u00a0according to the latest data by the Bureau of Labor Statistics<\/a>.<\/p>\n

Now, with commodities and interest rates and therefore future inflation expectations dropping, what does everyone think will happen with inflation going forward?<\/p>\n

Generally, trade partners will certainly respond in kind and besides tariffs, another way to guarantee that outcome is to weaken their currencies \u2014 so-called currency manipulation \u2014 in order to boost exports to the United States.<\/p>\n

China is already doing it again. In mid-March the\u00a0exchange rate of the yuan to the dollar<\/a>\u00a0was .1383, now it\u2019s down .1376, not much but that is a 0.5 percent depreciation.<\/p>\n

Other trade partners will eventually follow suit, especially if their export economies suffer in the short term under the weight of the tariffs. Their economy will slow down and they\u2019ll weaken their currencies in response to get a boost. Bet on it.<\/p>\n

That will make the U.S. dollar stronger ultimately.<\/p>\n

And prices will go down thanks to\u00a0the inverse relationship between the dollar and commodities<\/a>, too, with a strong dollar correlating with lower commodities prices and a weak dollar correlating to higher commodities prices.<\/p>\n

<\/p>\n

Asset prices are dropping for equities and cryptocurrencies, too. When money is withdrawn from assets whether it be stocks, crypto or commodities and put into bonds, prices go down!<\/p>\n

This has generally been true historically, too. For example, the Great Depression is often wrongly blamed on tariffs. It\u2019s wrong, the issues had to do with\u00a0competitive currency devaluations<\/a>\u00a0as economies came off the interwar gold standard, but let\u2019s roll with the hypothesis. The problem in the Great Depression wasn\u2019t inflation, it was deflation. Prices were falling.<\/p>\n

So, do tariffs cause inflation or deflation? Myopic pundits might try to dissemble and say both. They should make up their minds.<\/p>\n

The answer is actually neither. As Milton Friedman always taught \u201cinflation is always and everywhere a monetary phenomenon\u2026\u201d or an increase in the money supply beyond production. Tariffs neither cause nor prevent money printing. Central banks do that all by themselves.<\/p>\n

Maybe what\u2019s really happening is whatever negative news there happens to be, investors and their mouthpieces will just ascribe that to tariffs. But good luck changing people\u2019s expectations from what they\u2019ve been spoon-fed for three months.<\/p>\n

The American people were told prices would go up with tariffs \u2014 and they\u2019re going down.\u00a0Who could have foreseen such a likely outcome?<\/a><\/p>\n

\u2013 \u2013 \u2013<\/p>\n

Robert Romano\u00a0is the Executive Director of Americans for Limited Government Foundation.<\/em><\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

The post Analysis: Commodities, Interest Rates Collapse After President Trump\u2019s Reciprocal Tariffs Announcement<\/a> first appeared on The Star News Network<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

This post originally appeared at https:\/\/thestarnewsnetwork.com\/2025\/04\/03\/analysis-commodities-interest-rates-collapse-after-president-trumps-reciprocal-tariffs-announcement\/ by Robert Romano \u00a0 Commodities prices and interest rates…<\/p>\n","protected":false},"author":147,"featured_media":16090,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[],"class_list":["post-16088","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-wi-daily-star"],"_links":{"self":[{"href":"https:\/\/wifamily.news\/index.php?rest_route=\/wp\/v2\/posts\/16088","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/wifamily.news\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wifamily.news\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wifamily.news\/index.php?rest_route=\/wp\/v2\/users\/147"}],"replies":[{"embeddable":true,"href":"https:\/\/wifamily.news\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16088"}],"version-history":[{"count":2,"href":"https:\/\/wifamily.news\/index.php?rest_route=\/wp\/v2\/posts\/16088\/revisions"}],"predecessor-version":[{"id":16091,"href":"https:\/\/wifamily.news\/index.php?rest_route=\/wp\/v2\/posts\/16088\/revisions\/16091"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/wifamily.news\/index.php?rest_route=\/wp\/v2\/media\/16090"}],"wp:attachment":[{"href":"https:\/\/wifamily.news\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16088"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wifamily.news\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16088"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wifamily.news\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16088"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}