Goldman Sachs sees boost in US commodities production from Trump’s policies

U.S. energy and metals production could see a limited boost in the short run as a result of U.S. President Donald Trump's tariff plans, but a potentially bigger boost over the longer run from broader "commodity dominance" policies, Goldman Sachs said in a note on Wednesday.

Trump's Administration, fueled by competition with China, is prioritizing commodities in its trade and foreign policies, aiming to increase the U.S. oil and gas trade surplus for geopolitical power and decrease reliance on net imports of critical metals where China often dominates the supply chain, the bank said.

The U.S. administration has raised aluminum import tariffs to 25%, kept steel tariffs at 25% and removed all exemptions. President Trump, meanwhile, has proposed tariffs on key imports including oil and gas.

The investment bank expects the proposed 25% tariff on steel and aluminum to be largely passed on to U.S. domestic prices, assuming no significant exemptions, and potentially doubling the Midwest aluminium premium from $529 per tonne to $1,036/t in January 2025.

On the crude oil front, Goldman Sachs expects limited impacts, as a modest 10% tariff on all U.S. oil imports would likely transfer revenues from ex-U.S. producers and U.S. consumers to the government and refiners. The bank expects this tariff would not significantly raise WTI and Brent crude prices, but would hike the annual cost of refined oil products by $170 per U.S. household.

The U.S. administration’s dual goals of dominance and affordability reinforce Goldman Sach's Brent $70-85 range baseline, the bank said - a range that is conducive to robust U.S. supply growth.

"Rather than impacting our near-term market views, many of the commodity-related measures are infrastructure-related, suggesting longer-term support to primarily commodity supply," Goldman Sachs said.