Massive Gold Tariffs Hit. Re-price Incoming?

Washington just made a late-night decision, according to Reuters, to slap a hefty tariff on one-kilogram and 100-ounce gold bars. A July 31 Customs and Border Protection ruling abruptly re-categorised these standard bars under a code that attracts the same 39 per cent levy applied to other Swiss imports. At current prices, a single kilo is worth roughly US$77,000, so the duty adds almost US$30,000 per bar. This insane price hike is big enough to stop shipments in their tracks. Switzerland, which refines more than half of the world’s bullion, sent about US$61 billion of gold to the United States over the past year. That means that if the current flow were to stay the same, it would attract nearly US$24 billion in extra charges.

Swiss refineries got blindsided by the reversal and have already paused exports while their lawyers pick through the fine print. The kilo bar is the backbone of New York’s COMEX futures market, so traders now face the possibility of a supply drought right when gold is already scarce. Futures prices and physical premiums could decouple sharply. If imports seize up, dealers may melt existing 400-ounce “good-delivery” bars inside the U.S. into smaller units, driving refinery bottlenecks and widening spreads between domestic and offshore markets. In past disruptions, spreads have blown out by double digits. This time, the duty itself is nearly 40 per cent, so a premium of US$200–300 an ounce isn't crazy to believe.

The timing could hardly be worse. Gold is already up about 27 per cent this year on dollar doubts and relentless central bank buying. Layer a tariff-driven shortage on top, and the metal’s breakout above US$2,500 could feel tame. Some analysts see a “basis crisis” in which the paper contract price lags a runaway physical market, forcing the CME either to relax delivery standards or let futures blast off higher until supply catches up. Will we see a return of private “bullion flights”? That is when Gulf refiners ship bullion bars secretly to friendly vaults.

If this drags on, three wild outcomes could happen. First, America’s own miners could enjoy huge premiums, effectively selling domestically mined gold at international prices, plus tariff protection. Second, offshore hubs such as Singapore and Dubai could become the new price setters for kilo bars (would Trump really want this?). And finally, the tariff might accelerate talk of gold’s re-monetisation. A shortage of deliverable bars would only strengthen the argument that bullion is too strategic to be left as an asset that politicians can manipulate.

This is huge news and may be the start of something much bigger.