Russell: Commodities battered by Trump's whirlwind will find relief in 2026.
The whirlwind tariffs and policies of U.S. president Donald Trump will continue to impact commodities for some time. While the storm may subside in 2026 the ripples are likely to last.
Trump's attempts to remake global trade, and his changing geopolitical moves have increased volatility in the commodity markets. Prices are now driven more by headlines than fundamentals.
The Trump administration may calm down its tariff wars, and smooth out ruffled feathers, but the trend will likely continue into 2026.
The list of winners and loser in 2026?may differ?from that of 2025. This will depend largely on the version of Trump that the world receives.
GOLD'S BIG ANNUAL MEETS POLICY RISE
Gold, which was the best performer in 2025, with a 60% gain, would move into a consolidation stage, with the support of central bank purchases, and investors looking for alternatives to safe assets like U.S. Treasuries.
Gold would need to experience a new surge if the U.S. Federal Reserve were to lose credibility. This could happen if the new chair of the Fed is perceived as a Trump political lackey and reduces interest rates in order to boost the economy, even though inflation continues.
Another event that could boost gold is the risk of a reaction in the market to ongoing fiscal deficits and high debt burdens across much of?the developed world.
It is likely that commodities like crude oil and cobalt will be under considerable pressure if these risks materialise.
Many commodities are still at risk, even if the world economy is able to successfully navigate the second year of Trump’s second stint as president.
OIL, GAS, AND THE SUPPLY OVERHANG
If a peace agreement is reached in Ukraine to end the conflict, the price of crude oil could be affected by the rising supply as well as the return of Russian barrels on the market.
As more U.S. power plants come online, the price of liquefied natural gases (LNG) will also be under pressure. Lower prices are required to reduce oversupply.
What happens when Trump and his administration realize that some countries are not keeping their promises in terms of trade?
Many of his 'trade deals' include commitments to purchase more U.S. oil, sometimes at levels that are unrealistic or delusional.
A good example is the EU's commitment to purchase $250 billion of U.S. Energy each year.
Based on average prices in 2025?, Europe's imports from the U.S. of crude oil, LNG, and coal will be worth $82.3 billion by 2025. This is a slight increase over the $79.1 million in 2024.
According to commodity analysts Kpler, crude oil volumes dropped to 1.73 millions barrels per day in 2025, from 1.91million bpd. LNG imports increased to 72.24million metric tons, from 45.14million, and coal remained largely unchanged at 20.73million tons, from 20.44million tons in 2024.
The EU cannot expect to triple its imports of U.S. Energy in 2026 compared to 2025 because there is simply not enough crude oil, LNG, and coal available.
The risk is that Trump will not turn a blind-eye to the likely massive shortfall in the unrealistic commitment.
Metals Roundabout
Copper is another metal that has been on the Trump roller coaster. It hit a record high last December, as more metal poured into the U.S. amid fears that Trump would impose new tariffs in early 2026.
In 2025 the U.S. will likely have doubled their imports, meaning they've built up a large stockpile and depleted inventories around the world.
The resolution of this issue will depend on Trump's actions. If he imposes a tariff on the refined copper imports, that have been so far spared, then it is likely that U.S. exports will fall in 2026, as inventories will be depleted. This will in turn allow top importers like China to increase their purchases.
Rare earths and critical minerals are another set of commodities likely to make the list for 2026.
The Trump administration will continue to invest in building supply chains that are independent of China, the dominant mining and refining country for many minerals, including lithium and cobalt.
CHINA'S CONTROL OVER IRON ORE & COAL
Some commodities are more sensitive to the U.S. than others. They are also more dependent on China's economy, which is the second largest in the world.
Iron ore is the most important, with three quarters of all seaborne cargoes going to China's mills.
The price of iron ore remained stable in 2025, as Chinese demand was strong. However, 2026 may see prices rise as production at the massive new Simandou mine ramps up.
China and India are the two largest producers and importers of coal in the world.
The price of seaborne thermal coal will be influenced by the domestic production and electricity generation in China and India. There is a risk that prices may rise as these two Asian countries increase their renewable energy production.
Tariffs, trade disputes and a softer economy will continue to affect prices. However, the biggest drag on 2026's price is expected to come from a softer demand compared with escalating supply. Crude, coal, and copper are more vulnerable to a slowdown in growth if new LNG trains, oil barrels, and mines come on the market.
In this world, commodities face not only the risk of the next Trump post on social media, but also the threat of a physical wave that the market is unable to absorb.
These are the views of the columnist, who is also an author. (By Clyde Russell Editing By Marguerita Choy).
(source: Reuters)
