If it were possible to wear out a word, we certainly gave it a fair shake in the pandemic year of 2020 with ‘unprecedented'.

Five years on and only three weeks into 2025, and it feels like we're at it again, but this time with ‘uncertainty', especially when talking about commodity markets. 

At this rate, the world is on track to have the two terms combined into ‘unprecedented uncertainty' by the dusk of the decade. 

The metaphorical elephant in the room is, of course, the emblematic Republican elephant now back in the Oval Office. 

‘Potentially profound implications' for resources

As Wood Mackenzie put it on January 8, the now-freshly inaugurated 47th US President Donald Trump will be out to make his mark on global trade, geopolitics, and the energy transition, which carry "potentially profound implications" for natural resources and energy. 

If the world needed proof of that, it got it later that very same day when Trump, among other dramatic calls, refused to rule out using military force to seize control of critical mineral and oil-rich Greenland, an autonomous territory of US NATO ally Denmark. 

Predating that and continuing to loom large in the minds of market analysts are the uncertainties of Trump's self-described "beautiful" tariffs and the potential retaliatory actions of major trading partners. This is particularly the case regarding the timing and scale of China's response. 

Trump's Tariffs and the ‘Beijing Bazooka'

A common albeit not overly confident prediction is that the worst of the market turmoil will be endured throughout the first six months of 2025, with smoother sailing forecast for the second half. 

The logic is that it'll give time for the US to show a good glance at its hand in terms of how it'll wield its economic might. Meanwhile, China can hang tight and decide how to appropriately deploy the ‘Beijing Bazooka' of stimulus in response. 

The thinking for many commodity market analysts is that Trump's tariffs (if implemented at anything close to the scales threatened) could seriously damage the global economy and, in turn, drag down commodity demand and prices. 

Wood Mackenzie said that while its forecast was for global GDP growth of 3% this year, up from 2.7% in 2024, 50 basis points could be lost should the tariffs go ahead with partial retaliation by major trading partners. 

The situation is so prevalent in the minds of stakeholders in commodity chains that a survey released by CRU Group on January 14 found respondents considered "protectionism and trade restrictions" the biggest downside risk, with almost three-quarters of clients citing it, up from around one-third a year earlier. 

Will the sequel be ‘more gripping than the original'?

As unpredictable as he is, Trump is a known entity. He's a second-term President, and has been in the public eye for many decades. 

He's well known for staking a supersized position on issues and then winding it back throughout negotiations. This will probably be the case regarding Greenland, the tariffs, and various other issues — to at least a certain extent. 

While Trump's tariff threats on US imports have fluctuated anywhere from 10% to 100% for different trading partners, the CRU survey showed the largest number of respondents tip an average rise in tariffs in the 5-10% range, noting those in Asia expect the highest. 

But, relying too much on Trump's first term as a template for his second may be a fool's errand. 

Jonathan Czin, the Michael H Armacost Chair in Foreign Policy Studies at the Brookings Institution said Trump 2.0 "may be a rare instance in which the sequel proves even more gripping than the original". 

Republican China hawks more hardline than Trump

"In his first term, Trump still had to contend with traditional Republicans in the Congressional leadership, but the majority of Republican resistance to Trump has withered in the interim," Czin said on January 19 in the East Asia Forum. 

Czin noted that while toggling between threats and entreaties towards China, Trump's comments suggest "he wants a deal with China rather than a divorce". But, he said, with the changing shape of the Republican Party, he'll no longer personally define the sharpest edge of the GOP's hardline China policy. 

"Some Republicans are calling for the revocation of China's most-favoured-nation status, and some hawks in Trump's administration may see decoupling from China as the ultimate objective of his coming trade war," Czin said. 

Given the interconnection between the two economic giants' financial futures, it's hard to imagine anything close to a complete decoupling taking place, but if it were to be pursued, unprecedented uncertainty could be even closer to reality. 

"If the first trade war is at all instructive, the scope, scale and intensity of the second trade war will depend primarily on the dynamics between a small group of advisers in Trump's court," Czin said.

"Traditional economic considerations are likely to intrude only in the guise of the stock market, the fluctuations of which Trump sees as a real-time measure of his success – with downturns inhibiting his appetite for prolonging the tit-for-tat exchanges with Beijing." 

And it's those tit-for-tat exchanges that "will be a prominent feature" for metals throughout the year, WoodMac said. 

"The recent bans on germanium and gallium exports to the US – plus the tightening of graphite export rules – are unlikely to be the last," it said. 

Good Trump: ‘virtually everything goes right'

Meanwhile, in a list of contrarian views, veteran Reuters Asia commodities and energy columnist Clyde Russell presented a scenario in which Trump "is way better than expected". 

"In this scenario, virtually everything goes right," he said on December 30. 

"The threat of tariffs is enough to force concessions from major trading partners, resulting in the implementation of only a few small trade barriers. 

"The US remains the global economic standout, and the rest of the world essentially rides on its coattails.

"Inflation eases, monetary policy is relaxed, and China leads an Asian economic recovery as Beijing's stimulus efforts finally bear fruit," he said. 

In this blue-sky scenario, Russell expects commodity prices to go up, apart from crude oil (which we'll come back to). 

The US turning red won't stop the world going green

The inauguration of a known climate sceptic doesn't bode well for the pace of the clean energy transition in the US, which will, of course, have spillover effects for the rest of the world. 

Policy reversals and torn-up climate agreements will likely drag the transition. 

But there's a lot of momentum already underway. 

CG Capital Markets noted on January 14 that the world's efforts to decarbonise and wean off fossil fuels "imported largely from kleptocracies" are a big structural positive for industrial commodities that'll outlast Trump's second term and beyond. 

CRU's survey found that almost one-third of respondents in Europe and Asia believed fossil fuel consumption in their region had already peaked, and the majority expected it will have peaked by 2030. 

While "few" respondents based in North America and none in South America or Africa said they believed that consumption had already peaked, almost 60% said they believed it would by 2030. 

Russell even imagined a scenario on his list of contrarian views in which Trump's win inadvertently accelerated the transition. 

‘America First' or ‘America Alone'?

"One way China can counteract any US trade barriers is to boost its engagement with the rest of the world, and one of the best ways of doing this is by expanding trade in manufactured goods such as EVs, solar panels, batteries and wind turbines," Russell said. 

This could accelerate the transition on the back of cost-competitive Chinese goods, which non-US buyers may favour over expensive fossil fuels. 

It's a realistic enough possibility that WoodMac, too, listed it as a potential development that could shape the world this year. 

"China could choose to pursue its own path as it continues to decarbonise its economy, leveraging its competitive advantages in solar and EVs," the group said, echoing Russell's logic. 

"It might even bring forward its net zero pledge to 2050 and take leadership in the quest for net zero," WoodMac said. 

Russell said: "In this scenario, the US gets further left behind as Trump's ‘America First' policy effectively becomes America alone". 

Could OPEC+ fracture?

China revving up the green energy bandwagon along with Trump's ‘drill, baby, drill' agenda could place more stress on a troubled OPEC+. 

"The strategy to support price has worked well, but holding Brent above US$80/bbl for the fourth year in a row in 2025 looks very challenging," WoodMac said. 

Russell said if the ongoing crude oil demand softness was met with a boost of US supplies, it could place more pressure on the bloc's unity and see it start to fracture. 

"Some members, such as the United Arab Emirates, may take the view that it is best to monetise reserves sooner rather than later, especially if they start to believe that the China-led switch to EVs has become a juggernaut that could upend global energy markets," he said. 

The Peace Dividend

In 2016, US President Barack Obama's administration reportedly warned the then-first-time President-elect Trump that North Korea would be the top national security priority during his term. 

That warning seems almost quaint now when compared with Russia's aggression (currently involving North Korean troops) towards Ukraine, the Middle East conflict, Trump needling NATO allies, and palpable tensions between the US and China.  

Between his terms, Trump made bold statements about brokering peace deals in Ukraine and the Middle East. If he can do so, there's a peace dividend on offer for the world – as well as global markets. 

NOTE: a fragile ceasefire between Israel and Hamas is currently in force. 

"While the challenges are obvious, the peace dividend — not least for the global economy — can't be overstated," WoodMac said. 

The group added, however, that the implications for commodity markets "may be less positive". 

"Key commodity exports have continued to flow into global markets through both conflicts (Russian piped gas excepted). 

"Nonetheless, ending the war in Ukraine would reduce investment and trade friction and likely lead to higher supply across most commodities and softening prices," it said. 

However, Trump's recent statements about Greenland, Panama, Canada, China, and others inflamed concerns about his diplomatic tact and ability to bring peace to the world. 

There are also concerns that Trump's planned withdrawal of support for Ukraine could embolden Moscow. 

"He would placate Russia, unwary of the consequences of appeasing dictators," leading institutional and evolutionary economist Geoffrey Hodgson wrote in the Conversation on January 17. 

The War Demand

Meanwhile, earlier this month, billionaire mining financier Robert Friedland told the Future Minerals Forum in Saudi Arabia that military demand is now drawing "as much or more" critical raw materials as the energy transition. 

"The world is at war today, actually at war, and you have to talk about energy transitioning. Conceive of what that means," he said at a mining conference in London last month. 

He said military demand would get "much superior" results than energy transition demand, while adding it is [NET Present Value] insensitive. 

Perversely, the race to secure critical minerals increases the risk of conflict. 

Combating conflict threats

To combat this, a new venture, Resource Resolutions, announced a global advisory council on Trump's inauguration date. The council aims to reduce the intensifying threat of societal and geopolitical conflict. 

Council members include former chair of Shell and Bank of America, Chad Holliday, chair of Vale Base Metals, Mark Cutifani, and former UN under-secretary general Kandeh Tumkella, among others. 

"Conflicts over natural resources have been a problem facing humanity for centuries. Given current local, national, and global divisions, such conflicts now risk becoming worse," Holliday said. 

Resource Resolution's founder, Daniel Litvin, said, "In this fraught context, we aim to create a space for balanced dialogue". 

"With its senior and diverse perspectives, the council will help us identify how to create common ground between different groups, corporate, government, local community, and civil society," he said.