Could Trump’s tariffs spark a commodities super-cycle? Market watchers are divided

Published Sun, Apr 13 20257:36 PM EDT

A surge in commodity prices has analysts speculating on whether we could be in the throes of a super-cycle as trade developments and supply and demand shocks are expected to boost the rally in the market. Global markets have been gripped by volatility over the past week, with investors on tenterhooks as U.S. President Donald Trump rolled out, then suspended, his so-called reciprocal tariffs. As Sino-U.S. trade tensions reached boiling point this week, global markets resumed sell-offs that had already seen major indexes hit multi-year lows and trillions of dollars of value wiped off tech megacaps. Philippe Gijsels, chief strategy officer at BNP Paribas Fortis, told CNBC he already believed a commodities super-cycle was beginning before the election — but Trump's return to the Oval Office, and his subsequent raft of tariffs, have bolstered his view. A commodities super-cycle is a term used to describe a prolonged period of price rises that go beyond what is considered normal. One past super-cycle occurred in the mid-2000s , peaking in 2008 as China's role in commodity markets expanded. Gijsels said, however, that the next super-cycle could be the biggest in living memory. The strategy officer, who studied historic economic trends for his book "The New World Economy in 5 Trends," said the current macroeconomic backdrop suggested supply and demand shocks were likely to influence commodity prices for as long as a decade. "Metal shocks," he argued, would soon come into play, putting the price of some metals on an upward trajectory. "This is an environment where you need gold, because gold is a real asset. You need silver. You need copper," he said. Gijsels sees spot gold hitting $4,000 an ounce within the next couple of years. Typically seen as a safe haven asset in times of economic or geopolitical uncertainty, gold succumbed to the aftershock of Trump's policy seesawing in recent days before rallying 1.7% to around $3,228 an ounce on Friday morning. Meanwhile, Gijsels expects silver , which he says has "badly lagged," will jump around 59% from Friday's spot price. He predicts copper could double or triple in price. Front-month contracts for copper, widely seen as a bellwether for the shape of the global economy, were trading 3% higher at $4.64 per pound in New York on Friday morning. "In the short term we see some pressure on copper and silver," Gijsels said. "Copper is cyclical and will suffer from fears that the tariffs will create a serious economic slowdown, especially in China which is still a big user of the red metal." Despite market jitters around a possible trade war, Gijsels added that he saw conditions for these commodities remaining "very favorable." "I would see every pullback as a nice entry point," he said. "I am still bullish on all three of them. They will go way higher than most people will be willing to believe." Global trade war Not all commodities will surge, Gijsels conceded, naming cobalt and nickel among those which are unlikely to see a significant rise in value. However, he expects soft commodities including coffee and cocoa to move higher. "They're going to go higher because of climate change," Gijsels told CNBC. "If you look at cocoa, 51% [is produced in the] Ivory Coast alone, so you're very vulnerable in your supply. [And] longer term, soft commodities are going to go up because you have a population that is increasing as well." Pat Kennedy, co-founder of AllSource Investments, said most companies would be unable to absorb the increased costs arising from Trump's "staggering" tariffs and retaliatory measures from China and potentially others. "Before the manufacturing lines are the actual materials/commodities that go into making products," he told CNBC. "The price of those commodities will need to increase drastically to keep up with a global trade war." "The current tariff threat is not going away any time soon, meaning the repricing of key commodities will need to continually be revised upward to keep up with the ongoing escalations in this global trade war," Kennedy said. Kennedy's view is that a swathe of assets "will need to continually be revised upward" as a result of Trump's trade policies. Those include steel , aluminum , rare earths, agricultural products, organic chemicals and textile materials. "We'll witness the immediate effects of these price hikes in electronics like laptops, smartphones, tablets, and other gadgets," he said. "Additionally, clothing, toys, and groceries will also be affected. As for the potential 'upside' we can expect from these commodity prices, we should consider the level of tariffs imposed on the countries from which they originate … The hope is that the entire amount of tariffs won't be passed on to consumers, but at least half of that amount would be a reasonable assumption." In a note on Thursday, analysts at BMI said the intensifying U.S.-China trade war was continuing to create challenges for the commodities demand outlook. However, they still expect certain commodities to rally this year. BMI sees coffee and corn prices rising by 3.2% and 3.4% this year respectively, while they predict copper prices will surge 7.9% by the end of the year and tin to notch a 5.8% gain. Gold, its analysts predict, will jump 29.7% through 2025. However, André Castro Silva, a professor of economics at Nova School of Business and Economics, told CNBC he was sceptical about a trade war benefiting commodities. "A tariff usually hurts only the country that imposes it and would not change international commodity prices, [but] the difference is the magnitude of the change and the signal that the U.S. doesn't value international trade anymore," he told CNBC via email. "This change increases the risk of a recession. A global recession decreases the prices of all commodities. Commodities related to construction, such as copper, would have a stronger decrease." He acknowledged that market instability – like the shockwaves sent through equity markets in recent weeks – can increase demand for commodities. "However, this movement is likely not be enough to counter a decrease in prices. The effect of a global recession is stronger," Silva said.