President Trump's "Liberation Day" tariff blitz—centered on reciprocal tariffs—followed by China's retaliatory bazooka has triggered a growth scare in markets. Commodities are tumbling, reflecting concerns over deteriorating macroeconomic conditions as the tariff war escalates.
"Commodities taking a cue from the macro with WTI -9% to $61 (had to change this 3x to reflect lower prices) … copper down 5% and natural gas gas hovering around flat … yields break through 4% with the 10 year standing at 3.87%, dollar & Bitcoin flat," Goldman analyst Michael Nocerino wrote in a note earlier.
For the week, the Bloomberg Commodity Index—a commodities benchmark tracking 23 exchange-traded futures contracts across energy, metals, agriculture, and livestock—is on track to record its largest weekly decline (-4 %) in over a year.
More specifically, Citigroup head commodity analyst Max Layton provided more color on how tariff wars will produce increasing macroeconomic headwinds that will pressure commodity prices lower.
Layton, speaking earlier in an interview on Bloomberg Television, expects copper prices to slide an additional 8% to 10% in the coming weeks.
He said the tariff war is set to "bring down the cost of production, whether it's through lower oil or through just producers taking margin hits" in the next 6 to 12 months.
On the week, CME Copper futures are set to record their worst five days since the early Covid crash, down around 11%.
"This is a pretty amazing opportunity to be bearish and be short over the next two to three months," Layton said.
Goldman analyst Thales Arruda told clients earlier: "As a result, we expect that the US reciprocal tariffs' impact on commodities will largely come from their indirect negative economic growth impact."
"We're pricing a global recession. The tariffs are going to cause global trade barriers," Goldman analyst Rich Privorotsky noted.
Meanwhile, all the copper bulls who boasted their price targets in record-high territories have been forced to hit pause. That entire theme has been placed on the back burner—for now
