On Wednesday (March 12th), in the morning session of the Asian market, spot gold fluctuated narrowly and is currently trading around $2917.24 per ounce. Overnight gold prices rose nearly $30, reaching as high as $2922.09 per ounce and closing at $2915.55 per ounce. US President Trump announced the expansion of tariffs on steel and aluminum, adding for the first time nearly $150 billion worth of metal derivatives to the tax list. This measure not only threatens to increase costs for the industry and consumers, but may also have a profound impact on global supply chains and trade relations, leading to a resurgence of safe haven demand for gold in the market.

However, Ukraine and the United States stated in a joint statement on Tuesday that their officials agreed to accept the US proposal for an immediate 30 day ceasefire in the conflict with Russia during talks in Saudi Arabia. This makes gold bulls hesitant.

1. Specific content and impact of tariff expansion:

Trump has doubled the import tax rates for Canadian steel and aluminum to 50%, while maintaining the tax rates for all other countries at 25% and canceling previous exemptions, exclusions, and quotas. These measures will come into effect on April 1st.

The new tariff list covers a range of imported car and tractor parts, metal furniture, building materials, and mechanical components, with a total import value of $147.3 billion, of which nearly two-thirds are aluminum products and one-third are steel products.

2. Impact on Canada and Mexico:

Canada and Mexico, as the largest sources of metal imports for the United States, will be hit the hardest. These two countries are still fighting against Trump's 25% tariff on all products aimed at eradicating fentanyl trafficking.

Despite the temporary suspension of tariffs on goods subject to the rules of origin in the USMCA trade agreement, the new measures still pose significant pressure on the economies of both countries.

3. Industry reactions and cost pressures:

Equipment manufacturers in Wisconsin have stated that the new metal tariffs may only increase costs as the supply base for most small metal components has shifted overseas. Several manufacturers have stated that they are weighing the issue of price increases.

Kip Eideberg, the government relations director of the Association of Equipment Manufacturers, pointed out that tariffs may increase domestic steel prices, and agricultural equipment manufacturers may announce price increases within one or two weeks.

4. Issues of metal processing reflow and competitiveness:

Whether Trump's tariffs will cause metal processing to flow back or reduce the competitiveness of some American manufacturers in competition with their global counterparts is an unresolved issue.

Since Trump announced the modification of tariffs, the futures price of hot-rolled steel in the Midwest of the United States has risen by over 21%, or $166 per ton, to $925.

5. White House's stance and future plans:

The White House refused to comment on the potential cost increase caused by tariffs, stating that it is an extension of Trump's first term "America First" economic agenda aimed at rebuilding the US industrial base, reducing taxes, and increasing US energy production.

White House spokesperson Kush Desai stated that President Trump will once again use tariffs to create a level playing field for American workers and revitalize America's industrial strength.

According to the US political news website Axios, the White House announced in a statement on the 11th that the additional 25% tariff planned by the US on steel and aluminum products imported from Canada will not take effect. White House spokesperson Kush Desai said in a statement that after US President Trump threatened to use executive power to impose huge tariffs of up to 50% on Canada, Ontario Governor Ford said in a conversation with US Commerce Secretary Lutnik that he would waive the 25% surcharge on electricity exports to three states in the United States. Desai also stated that according to Trump's previous executive order, the 25% steel and aluminum tariffs on all trading partners will officially take effect from midnight on March 12th, without any exceptions or exemptions.

6. Ukraine agrees to accept the US ceasefire proposal, now it's up to Russia

Ukraine and the United States stated in a joint statement that their officials agreed to accept the US proposal for an immediate 30 day ceasefire in the conflict with Russia during talks in Saudi Arabia. In exchange, the United States will resume military aid and intelligence sharing to Ukraine. US Secretary of State Rubio said that he will now submit this plan to Russia, and it is now Moscow's turn to make a decision.

Trump said he hopes Russia will accept a ceasefire and will invite Zelensky back to the White House.

Zelensky stated that if Russia accepts, the 30 day ceasefire agreement reached between Ukraine and the United States will take immediate effect.

Russian President Putin expressed willingness to discuss a peace agreement, but ruled out the possibility of territorial concessions and demanded that Ukraine fully withdraw its troops from the four regions claimed by Russia to be sovereign.

According to Dmitry Smirnov, a Kremlin journalist cited by Russia today, Russian President Putin will have a dialogue with Trump on Friday, which will be "more than just a phone call".

Summary:

Trump's expansion of metal tariffs could escalate global trade tensions, particularly impacting major trading partners such as Canada and Mexico. This uncertainty typically drives investors towards safe haven assets such as gold, thereby supporting the rise in gold prices.

The ceasefire proposal may put pressure on gold prices by reducing geopolitical risks and hedging demand, but changes in the US dollar trend and inflation expectations remain key influencing factors.

MarketPulse by OANDA market analyst Zain Vawda said, "Gold may continue to be supported in the face of ongoing market uncertainty, which stimulates demand for safe haven assets. However, any positive developments in the Russia Ukraine negotiations could lower the risk premium

The market will focus on Wednesday's US Consumer Price Index and Thursday's Producer Price Index. According to a Reuters survey, the consumer price index is expected to rise by 0.3% in February. Traders currently expect the Federal Reserve to cut interest rates in June.