Silver (XAG) Forecast: Will Trump’s Trade Agenda Sink China Industrial Demand?

Trump’s Policies Could Set the Stage for Major Silver Market Moves

As President-elect Donald Trump prepares to take office on January 25, 2025, traders are watching closely for signals on how his agenda could influence silver prices. Policies targeting trade, manufacturing, renewable energy, and inflation could drive significant changes in industrial demand and safe-haven positioning. With China playing a central role in global silver consumption, Trump’s approach to U.S.-China relations could be a decisive factor in shaping the market.

U.S.-China Trade Tensions: A Threat to Industrial Demand

Trump’s potential imposition of tariffs on Chinese goods or other trade restrictions could undermine silver demand in key sectors like electronics and solar panel manufacturing. Analysts from ING and JPMorgan warn that reduced Chinese manufacturing output, particularly in these silver-intensive industries, would likely exert bearish pressure on prices. However, any initiatives to incentivize U.S. domestic manufacturing could offset this decline by creating new sources of demand.

Renewable Energy in the Crosshairs: Silver’s Solar Future at Risk

Trump’s stance on renewable energy could make or break silver demand from the solar sector, which accounts for a significant share of industrial consumption. Industry experts from the IEA have stressed that U.S. policies on solar incentives have global implications, given America’s role in driving innovation and installation. If renewable energy subsidies are rolled back, it would be a bearish development for silver, as photovoltaic cell production relies heavily on the metal. On the other hand, a surprise pivot toward green energy would spark bullish momentum.

Inflationary Policies Could Support Safe-Haven Demand

Trump’s plans for tax cuts and infrastructure spending could ignite inflationary pressures, weakening the U.S. dollar. Economists at Goldman Sachs note that a weaker dollar makes silver more attractive as a hedge, potentially driving prices higher. In addition, geopolitical risks from a more aggressive foreign policy could bolster silver’s appeal as a safe-haven asset, with strategists at UBS and Bank of America emphasizing this relationship.

Market Outlook: Brace for Volatility, with Mixed Signals

The near-term silver market outlook is neutral but with the potential for both bearish and bullish catalysts. If trade relations with China deteriorate, industrial demand could decline, creating downward pressure. However, fiscal stimulus and inflationary trends may provide support, especially if geopolitical tensions escalate. Traders should position cautiously, watching for firm signals on trade policy and renewable energy initiatives. If inflation picks up and the dollar weakens, expect a more bullish environment to emerge.

More Information in our Economic Calendar.