【MACRO Alert】Trump administration's unilateralism and its damage to the international order and the

The Trump administration has ignored the core principle of the World Trade Organization (WTO) rules - the most-favored-nation treatment, and imposed a 10% tariff on Chinese exports to the United States in accordance with the International Emergency Economic Powers Act, a domestic law of the United States. This behavior is a typical unilateralism, which seriously tramples on the international order based on international law and undermines multilateralism and international rule of law. Multilateralism has been the basic and dominant institutional arrangement and value concept of the international community since World War II, and has promoted world peace, stability, development and prosperity.

However, the unilateral behavior of the Trump administration not only ignores the WTO's most-favored-nation treatment principle, but also repeatedly withdraws from international organizations and agreements, such as UNESCO, the UN Human Rights Council and the Paris Agreement on Climate Change, which seriously undermines multilateralism and international rule of law. Against this backdrop, the intensification of geopolitical tensions and trade wars has driven the surge in gold prices. Citigroup expects gold prices to reach a record high of $3,000 per ounce within three months.

Trump's proposed tariffs could slow economic growth, reignite inflation and disrupt global trade, which has led to a sharp increase in investor demand for gold. Citi analyst Kenny Hu pointed out that investors will continue to seek the safety of gold, and central banks may continue to increase their gold reserves. In the past few days, gold prices have hit new highs due to the possibility that Trump may impose tariffs on other countries, further consolidating the role of gold as a means of storing value in uncertain times.

Meanwhile, Russian consumers bought record amounts of gold in 2024 to protect their savings amid sanctions. Russian consumers bought 75.6 tonnes (2.7 million ounces) of gold in 2024, including bars, coins and jewelry, ranking fifth globally, according to the World Gold Council. That was up 6% from the year before and more than 60% since Putin sent troops into Ukraine nearly three years ago. Russia is the world's second-largest gold producer, mining more than 300 tonnes of the precious metal each year. Russian gold has received a cold shoulder in the West since the outbreak of the Russia-Ukraine conflict, with flows to trading hubs such as London and New York all but halted.

Russia's central bank, once the world's largest gold buyer, has yet to resume large-scale purchases. Retail gold demand climbed after the outbreak of the Russia-Ukraine conflict as Russians began looking for alternative ways to safeguard their savings rather than traditional investments in dollars or euros. Western sanctions last year exacerbated cross-border payment difficulties and led to some foreign exchange shortages, while the ruble fell to a record low. In an effort to stimulate gold sales, Russia abolished the value-added tax on retail gold purchases immediately after the conflict, after discussing such a move for more than a decade. Rosstat said inflation in 2024 would be 9.5%, the highest level since the outbreak of the conflict in February 2022, and recent data showed that prices continued to rise in the first weeks of 2025.

The escalation of Western sanctions against Russia has made gold buying an attractive alternative to traditional investments as the ruble has fallen to an all-time low since the conflict began. Cross-border payment restrictions have also made it harder for Russian citizens to diversify their investments abroad . Citigroup also noted that a stronger dollar would increase the incentive for central banks in emerging economies to increase their gold reserves to support their currencies, while investors would turn to physical gold and gold ETFs at the same time. Trade war concerns have also led London-based traders to move gold to the United States as they worry that gold may not be excluded from potential tariffs. Citigroup said the premium as of Wednesday implied about a 20% chance that Trump would include gold in a 10% global tariff.

Gold prices held steady near $2,870 an ounce on Thursday after Trump said the U.S. could take over Gaza, comments his aides tried to soften, while he said he wanted to start working on a new nuclear deal with Iran. Washington is also expected to present a plan to end the Russia-Ukraine conflict next week. The World Gold Council said global central bank demand for gold showed no signs of slowing. There were signs that demand for gold had increased as major dealers tried to move gold to the U.S. before any tariffs were implemented.