U.S. trade policy uncertainty and global commodity prices: evidence from asymmetric and dynamic asymmetric causality tests

Abstract

This study examines the relationship between US trade policy uncertainty (TPU) and the global prices of selected commodities. The commodities included in the analysis were selected from among the products that stand out in international trade within their respective groups. These include sugar and soy representing food, oil and natural gas representing energy, gold and silver representing precious metals, and copper and aluminum representing metals. The study covers monthly data from 1990M01 to 2025M04, and the research period was chosen to provide the highest possible observation interval for the variables. The relationship between the variables was examined using the Hatemi-J asymmetric Granger causality and Hatemi-J dynamic asymmetric Granger causality approaches. According to the Hatemi-J asymmetric causality findings, which assume that asymmetric relationships between variables remain constant throughout the period under consideration, no Granger causality was observed between US trade policy uncertainties and global commodity prices (GCP). According to the dynamic asymmetric causality findings, the impact of US TPU on commodity prices varies across periods and commodity types, exhibiting asymmetry depending on the direction of shocks. Granger causality is confirmed in the 2007-2008 global financial crisis, where positive US trade policy shocks led to positive gold price shocks. The findings reveal time-varying asymmetric causal relationships between gold, silver, aluminum, copper, crude oil, natural gas, soybean, and sugar prices and trade policy uncertainties. Trade policy uncertainty creates not uniform but commodity-specific and heterogeneous effects on commodity markets. The potential for global impacts from US trade policy uncertainties is evident in commodity prices. In this framework, the study's policy recommendations suggest that policymakers and market actors consider changing conditions, assess the nature and direction of uncertainties when evaluating volatility in commodity markets, and take measures to reduce the pass-through of price shocks caused by uncertainties into domestic prices.