A surprise customs ruling sent gold futures soaring to record highs before the President intervened to clarify the policy
The global gold market experienced unprecedented volatility in early August 2025 when conflicting signals from Washington sent precious metals traders into a frenzy. What began as a routine customs classification query ended up triggering the highest gold prices in history, before President Donald Trump himself stepped in to calm the chaos.
The Spark That Ignited the Market
The confusion began with a seemingly mundane letter dated July 31, 2025, from the U.S. Customs and Border Protection (CBP) agency. In response to a Swiss company’s inquiry about tariff classification, CBP official James Forkan, acting director of the National Commodity Specialist Division, ruled that one-kilogram and 100-ounce gold bars would be subject to the 39% tariff imposed on Swiss imports.
The ruling was a bombshell for the precious metals industry. JCK Magazine reported that these cast gold bars, which have been “stamped and needled or lasered with identifying information,” were deemed to have been “further processed” and therefore fell outside the traditional tariff exemptions for gold bullion.
The letter specified that these bars would be classified under harmonised tariff code 7108.13.5500, making them subject to the same steep duties affecting other Swiss imports.
Record-Breaking Market Response
When the Financial Times first reported the CBP ruling on Thursday, August 7, gold futures markets erupted. By Friday morning, U.S. gold futures had soared to an all-time high of $3,534.10 per ounce—a record that stunned even seasoned precious metals traders.
The dramatic price surge highlighted the critical role that Swiss refineries play in the global gold supply chain. Switzerland processes approximately 70% of the world’s gold, with much of it refined specifically for the U.S. market. The affected one-kilogram bars are the most common form traded on COMEX, the world’s largest gold futures market.
“The usually apolitical gold market found itself caught in the crossfire of international trade policy,” noted analysts, as investors grappled with the unprecedented situation of gold—traditionally viewed as the ultimate safe haven asset—being subject to tariffs.
Why Switzerland Matters to the Gold Trade
The tariff threat was particularly significant because of Switzerland’s unique position in the global gold ecosystem. Swiss refineries typically receive large bars from London and recast them into the standardised 100-gram and one-kilogram bars that New York warehouses accept.
The New York Times reported that gold accounts for approximately two-thirds of Switzerland’s exports to the United States, contributing significantly to the $40 billion trade deficit that had apparently frustrated President Trump during phone calls with Swiss President Karin Keller-Sutter.
The Swiss Precious Metals Association immediately warned that the 39% tariff would make it “economically unviable” to export gold products to the U.S., effectively severing a crucial link in the global bullion supply chain.
Trump’s Decisive Intervention
Just as quickly as the crisis had erupted, it was resolved. On Monday, August 11, President Trump took to Truth Social with a characteristically brief but definitive statement: “Gold will not be Tariffed!”
The announcement had immediate market impact. CNBC reported that gold futures closed 2.48% lower at $3,404.70 per ounce following Trump’s clarification, though prices remained well above pre-crisis levels.
The President provided no additional details about the policy reversal, but White House officials had earlier indicated that an executive order would be forthcoming to address what they termed “misinformation” about gold tariffs.
Industry-Wide Implications
For the jewellery industry, the brief but intense crisis offered a stark reminder of how quickly global supply chains can be disrupted by policy changes. Sara Yood, president and CEO of the Jewelers Vigilance Committee, explained the broader context: “Gold, in its unwrought form, was on the original Annex II exemption list for a reason: to enable the free flow of trade in a critical mineral that is also currency.”
The episode highlighted the vulnerability of the precious metals supply chain to regulatory interpretation. As Yood noted, the customs ruling would have “put further stress on the already-in-high-demand reclaimed/reused/recycled gold market in the U.S.”
Canadian Jewellery Sector Concerns
For Canadian jewellers, the gold tariff confusion came at a particularly sensitive time. The industry is already grappling with broader tariff pressures, including the looming August 1 deadline for a 35% tariff on Canadian imports unless a bilateral trade deal is reached.
Canada’s gemstone and precious metals sector exported US$9.11 billion to the U.S. in 2024—representing 27.4% of the sector’s total US$33.20 billion in related exports. The prospect of additional gold-specific tariffs would have created another layer of complexity for Canadian jewellers already navigating challenging trade conditions.
Market Analysis and Future Outlook
The gold tariff episode demonstrated the extreme sensitivity of precious metals markets to policy uncertainty. UBS precious metals strategist Joni Teves told the Financial Times that the customs ruling “creates an issue for the global gold market, which uses COMEX gold futures to hedge positions.”
Stephen Innes of SPI Asset Management noted the broader implications: “By targeting kilo bars—the format most embedded in U.S. markets and jeweller demand—the administration isn’t just collecting tariffs. It’s rewriting the international script on what is and isn’t a neutral store of value.”
Despite Trump’s clarification, J.P. Morgan Research continues to project gold prices averaging $3,675 per ounce by Q4 2025, with potential to reach $4,000 by mid-2026, driven by continued geopolitical uncertainty and central bank demand.
Lessons for the Industry
The brief gold tariff crisis offers several key takeaways for jewellery industry professionals:
- Supply Chain Vulnerability: Even seemingly routine customs classifications can trigger major market disruptions
- Price Volatility: Policy uncertainty can drive extreme precious metals price movements within hours
- Communication Importance: Clear, timely official communication is crucial for market stability
- Global Interconnection: The incident highlighted how deeply interconnected global precious metals markets have become
Looking Ahead
While Trump’s definitive statement appears to have resolved the immediate crisis, the episode serves as a reminder of the ongoing policy uncertainties facing the jewellery industry. As trade policies continue to evolve, industry participants must remain vigilant about potential supply chain disruptions and price volatility.
The gold tariff confusion may have lasted only a few days, but its impact on market psychology and pricing dynamics continues to reverberate through the global precious metals trade. For Canadian jewellers and their international counterparts, it’s a stark reminder that in today’s trade environment, even the most traditional safe-haven assets aren’t immune to policy-driven turbulence.
For the latest updates on trade policy impacts on the jewellery industry, visit canadianjeweller.com
