This past week, the Supreme Court ruled 6-3 against the Trump Tariffs that were instituted on Liberation Day in April of 2025. This article will briefy talk about why tariffs are being used and what the change means for the Precious Metals market.

What Are Tariffs and Why are they used?

A tariff is a tax that a government places on imported goods. When a country imposes a tariff, businesses that bring those goods into the country have to pay a percentage of the product's value to the government. It is beyond the scope of this article to consider who pays the tariff, but any person with a knack for business understands that the entity (business) passes any incurred costs on to the consumer. 

Why is President Trump using Tariffs?

The trend of the decade is protectionism and deglobalization. Protectionism is when the government creates policies that restrict international trade in order to shield domestic industries from foreign competition. The classic tools are tariffs which are taxes on imports, import quotas, subsidies to domestic producers, and regulatory barriers making foreign goods difficult to sell. It's part of an attempt to protect local jobs and to become more independent from logistical nightmares in supply chains, which we saw during the COVID crisis. 

Deglobalization is the broader trend of reduced economic integration between countries and is the result of policies tied to protectionism. Protectionism is a choice and degloblization is the outcome. All of this is inflationary as part of the disinflation we saw during the early 2000's was part of China joining the WTO which gave Americans the ability to buy cheap goods from China that they ultimately financed by buying our debt. Now they are buying gold instead of our debt, but that's another conversation. More on that later. 

The tariffs are the only way that Trump sees he can 'fix' the trade deficit. We import way more than we export, and tariffs are his way of balancing the deficit. The theory is that the countries will have to pay the United States in order to sell their products here, or atleast that's how Trump sells it to the public. The reality is that the consumer pays the tariff because the business raises the price in accordance with the tariff and it's passed on to the consumer. So it's not too much of a strech to say that tariffs increase inflation, and that makes sense when viewing the past year of price action in Gold & Silver, since both of them rallied substantially since liberation day of last year. 

Replacement Tariffs

The replacement tariffs are about half of what they were before the Supreme Court ruled them unconstitutional. The "effective average tariff rate" before the ruling was 16/17%, and now it's going to be 9/10%. The affect of the tariffs are largely unknown until later on, because it takes time for these things to trickle through the economy and for us to see the 'results' of how they are actualy affecting buying and selling behaviors. Gold & Silver rallied hard after Liberation Day, which if you ask me is a pretty good indication that the tariffs were going to create inflation, and we saw a lot of companies raise prices to reflect that reality. It seems as if the replacement tariffs are lower, but we also don't know how the President's plans for further tariffs will evolve, as he has five "fallback" options for tariffs other than his authority under the IEEPA (which was shotdown). 

What I do know and understand is that Donald Trump hates being told no, and likes to revenge on people & things that don't let him get his way. I would expect him to do something extreme in the wake of the Supreme Court shooting down his tariff policy. I keep telling people that asset markets are very risky and that I prefer to be in Gold, Silver or Cash in this current market. I think we are going to see volatility this year related to this specific dynamic within the financial markets. 

Replacement Tariffs Affect on Precious Metals

The thesis for the Secular Bull Market in Precious Metals is unchanged and the tariffs being reduced may affect the short-term price action, but again, we don't know what Trump will do as far as instituting further tariffs. He certainly seems set on figuring a work-around for getting shot down by the Supreme Court. 

That brings me to my next point, about the Precious Metals Bull Market. It is an inevitability because of the fiscal position of the United States Goverment (inflation), rising geopolitical concerns (wars), and a probably coming Bear Market in the Stock Market that will see a lot of money looking for a new home. 

I would say that for the forseeable future, the game is to buy the dips in Silver & Gold until they become prohibitively expensive. All we can do is own the assets that are trending and that make sense with the Macroeconomic backdrop, and manage our risks along the way while we take profits when things get extreme. 

I think the simplest way to make money in markets is to follow the trend. The trend is up, and there is much further to go. 

Please let me know if you have any questions or comments. Have a great weekend, and buy and hold some Gold & Silver at www.TheBullionX.com

William Anderson