- The recognition of tariffs as illegal led to a sell-off of greenbacks.
- Gold is rising thanks to the return of the ‘debasement trade’.
The slowdown in the US economy and the Supreme Court’s overturning of the White House’s tariffs have dampened the enthusiasm of US dollar supporters. In 2025, GDP expanded by 2.2%, with growth slowing from 4.4% to 1.4% in the fourth quarter. According to estimates by the Bureau of Economic Analysis, the shutdown deducted 1 percentage point from gross domestic product. Donald Trump believes that the government shutdown cost the economy 2 p. p.
GDP is being held back by both the cooling labour market, driven by the White House’s anti-immigration policy, and the tariffs it has imposed. According to estimates by the Federal Reserve Bank of New York, about 90% of the tariffs are borne by American companies and households. The Supreme Court’s cancellation of import duties could have been a form of fiscal stimulus. However, instead of the previous ones, Donald Trump immediately introduced new ones. First at 10%, then the figure rose to 15%, for all countries, with some goods exempted.
The global economy managed to cope with the previous tariffs. The new ones may prove even less painful. In 2025, the average rate rose by more than 10 percentage points to 16%. In 2026, it might drop to 13.7%.
According to Dallas Fed President Lori Logan, the new import duties increase uncertainty for businesses and the Fed. The central bank may extend its pause in the monetary policy easing cycle. This is good for the US dollar. Indeed, after the Supreme Court’s verdict, the chances of a Fed rate cut in June fell from 54% to 52%.
Gold took advantage of the USD’s weakness. The precious metal reached its highest level since the January sell-off. The return of tariffs following the court’s decision will increase the budget deficit and revive the ‘debasement trade’. Donald Trump claims that the Supreme Court’s verdict changes nothing and that the White House can raise even more money. In reality, this may prove difficult.
Alongside uncertainty over tariffs and the still high level of geopolitical risk in the Middle East, Gold is supported by the end of the Lunar New Year and the return of Chinese speculators to the market. As a result, Russia’s decision to sell 300 thousand ounces may prove to be a mistake. Reserves have fallen from a record high of 74.8 million ounces in January, potentially bringing around $1.4 billion to the budget.
The FxPro Analyst Team