This is not a drill
On 1 February, US president Donald Trump announced 25% tariffs on Canada and Mexico and a 10% tariff on China, due to kick in from 4 February. The trade wars have begun.
Trump made extensive tariff threats while on the campaign trail in the lead-up to the US election but, until recently, experts had been warming up to the idea that these were little more than a bargaining chip. The latest moves suggest otherwise.
Here’s everything you need to know – from what’s been announced to how markets have responded.
Markets tumble as trade war heats up
Stock markets tumbled in Asia on Monday in response to the latest news from Washington. In Taiwan, the Taiex index shed 3.53%. In Japan, the Nikkei 225 closed 2.66% lower. Meanwhile, in South Korea, the Kospi fell 2.52%.
European markets have also tumbled so far this morning, as investors process the fact that the EU could be next on Trump’s hit list. The Stoxx Europe 600 is down more than 1% at the time of writing.
Meanwhile in the UK, the FTSE 100 is down more than 1% so far. Trump has indicated that a deal could be “worked out” with the UK to exclude it from tariffs, but even if this is the case, a global trade war would spell bad news for domestic markets and the economy.
European tariffs: “the writing is on the wall”
Although no tariffs have been directed at Europe so far, the “writing is on the wall”, according to Michael Field, chief market strategist at Morningstar. “That Donald Trump has no qualms about imposing them on his nearest neighbours, means that Europe too should be bracing for impact,” he added.
Trump recently told the BBC that the European Union has “taken advantage” of the US and is “way out of line” for not importing more US goods. In 2023 (the most recent year we have annual figures for), the US-EU trade deficit was $208.2 billion.
“They don’t take our cars, they don’t take our farm products, they take almost nothing. And we take everything from them,” Trump said.
Canada and Mexico: is a recession on the cards?
“Since exports to the US account for around 20% of their GDP, today’s tariffs could plunge both the Canadian and Mexican economies into recession later this year,” said consultancy Capital Economics.
The effect of Trump's tariffs will be felt in the US too, though, with consumers now facing the prospect of higher prices. Capital Economics expects US inflation to rise further and faster than previously anticipated, exceeding 3% later this year.
Carve-out for Canadian energy
Trump’s tariffs include a special carve-out for Canadian energy imports, which will be hit with a lower 10% tariff (as opposed to 25%).
According to the BBC, 61% of oil imported into the US between January and November last year came from Canada.
Canadian prime minister Justin Trudeau has previously said that Canadian energy “powers American manufacturing, businesses and homes.”
Speaking in recent weeks before Trump's tariffs were imposed, Trudeau added: “The alternative for [the US] would be more resources from Russia, China or Venezuela. Canada is a safe, secure and reliable partner in an uncertain world.”
Over the weekend, Trudeau announced 25% retaliatory tariffs against the US in response to the latest developments.
What do tariffs mean for inflation?
Just as prices were coming under control, Trump’s tariffs could fan the embers of inflation on a global scale.
Firstly, US consumers will need to pay more for imports from impacted countries.
US businesses will feel the effects too, if they have imported goods or materials anywhere in their supply chain.
If costs increase, businesses could be forced to raise their prices in an attempt to protect their margins – another hit for consumers.
Furthermore, the countries that Trump has targeted are already starting to respond with retaliatory tariffs of their own, and so the problem spreads.
The effects won’t be confined to the US, Canada, Mexico and China either. Global economies operate in a tangled web of interdependence. If goods in the US suddenly become more expensive to produce because of tariffs, any other country that imports those goods will have to pay a premium too.
Markets were not prepared for Trump's aggression
Trump has surprised markets over the weekend with both his speed and aggression.
George Saravelos, global head of FX research at Deutsche Bank, says: “By our estimates, the market was roughly pricing the equivalent of a 5% universal tariff being enacted in coming months, equivalent to a 30bps ‘hump’ in the US inflation curve.
“The announcements this weekend are roughly three times larger with reasonable passthrough assumptions, i.e., we would expect a 1% US headline inflation impact if tariffs are sustained.
“These tariffs are also roughly five times as large as the cumulative sum of trade actions taken under the first Trump administration measured in terms of average tariff increases.”
Saravelos thinks the market needs to “structurally and significantly reprice the trade war risk premium”.
Retaliatory tariffs: Canada bites back
“Canada will not stand by as the United States imposes unjustified and unreasonable tariffs on Canadian goods,” the Canadian government said. “In response, we are moving forward with 25% tariffs on $155 billion worth of imported US products.”
Some items (covering $30 billion of US imports) will be impacted from 4 February, including certain foods, beverages, cosmetics and more.
Other items (covering the remaining $125 billion) will be hit at a later date, including things like passenger vehicles, steel and aluminium.
China to challenge tariffs at World Trade Organisation
China’s Ministry of Commerce has said it will take “corresponding countermeasures” against the US after Trump announced a 10% tariff on Chinese imports. It has not yet given any specifics.
China has also threatened to take a complaint to the World Trade Organisation (WTO), although experts say there is little the WTO will be able to do.
First and foremost, the US has previously ignored WTO rulings under the Biden administration. Furthermore, the body within the WTO that is responsible for resolving disputes is currently short on judges, as the US has been blocking new appointments for the past two years. This means the judges can no longer achieve a quorum.
US equity markets fall
The S&P 500, the Dow Jones Industrial Average and the Nasdaq are all in the red this morning.
At the time of writing, around 30 minutes after market open:
- S&P 500: -1.77%
- Dow Jones: -1.38%
- Nasdaq: -2.24%
“Trump’s launch of tariffs in 2018 did raise revenues for America but US corporate profits took a hit that year and America’s S&P 500 index fell by a fifth, so markets have understandably taken fright this time around,” said Russ Mould, investment director at AJ Bell.
How much revenue will tariffs raise for the US government?
On social media, Trump has previously said that revenue from tariffs could be used to pay off US debt and “make America wealthy again”. However, it is US consumers who will end up footing at least part of the bill in the form of more expensive goods.
“Revenues from the tariffs could reach almost $250bn per year, or 0.8% of GDP. That could be a significant hit to the US economy if those revenues are used to reduce the federal budget deficit rather than recycling them into the economy by cutting taxes or boosting federal spending,” said Paul Ashworth, chief North American economist at Capital Economics.
He adds that US exporters will also lose out thanks to a stronger dollar. They could also be hit by retaliatory measures from other countries.
Trump pauses tariffs on Mexico for one month
US tariffs on Mexico have been paused for one month following a conversation between Trump and Mexican president Claudia Sheinbaum.
Sheinbaum wrote on social media site X: “We had a good conversation with president Trump… we reached a series of agreements”.
Mexico has agreed to reinforce its northern border with 10,000 National Guards to reduce drug trafficking. In return, Sheinbaum has sought commitment from the United States that it will prevent the trafficking of high-powered weapons to Mexico.
Car makers take a hit
Car makers have been some of the worst-impacted stocks in today's tariff-related sell-off.
Toyota and Nissan both fell by more than 5% during trading hours on Monday, while Honda fell by more than 7%.
European markets are still open but BMW is down more than 3% at the time of writing, and Volkswagen nearer 5%.
The US still has several hours to go until markets close, but General Motors is almost 2% lower at the time of writing, Ford is down more than 1%, and Stellantis is down more than 4%.
Case study: how a Chevrolet Silverado is made
Chevrolet, owned by General Motors, is one of the most popular US car brands. Its bestselling model last year was the Chevrolet Silverado.
Looking at how this car is made can help bring the potential impact of tariffs to life.
As Caleb Miller, associate news editor at Car and Driver points out, a portion of the company’s trucks come from General Motors’ factory in Silao in Mexico, while others are built in Oshawa in Ontario.
This is just one example at one company – scale it up and you start to get a picture of just how disruptive tariffs could be for businesses.
Ford and Stellantis – two other American car giants – also have factories across the border in Mexico and Canada.
Can the US bull market continue?
A lot has happened over the past seven days. This time last week, US equity markets were rattled by the DeepSeek news and today it is tariffs that are causing disruption.
Indeed, even before the events of the past week, the word “bubble” was being used more and more extensively as investors questioned whether US equity valuations had gotten out of hand. The US tech sector in particular has flown in recent years. Whether it is on the brink of an Icarus moment is up for debate.
Despite this, Tom Stevenson, investment director at Fidelity International, warns against panic, encouraging investors to “view the threat to markets in context”.
He adds: “January closed out on Friday on a high, global shares rose by 3.4% during the month, with the S&P 500 up 2.8% and the equal-weighted version of the same index up 3.5%. Much of this strength can be attributed to another solid earnings season, with 80% of the companies reporting so far beating expectations.”
That concludes our live coverage for today. Thank you for joining us. We will be back tomorrow with further updates and analysis.
The headlines overnight
Good morning and welcome back to our live blog on Trump’s tariffs. These are the headlines since we signed off yesterday evening:
- Tariffs on Canada have been postponed after last-minute talks between Trump and Trudeau.
- In exchange, Trudeau has agreed to reinforce the US-Canadian border in a deal that has echoes of the agreement between Trump and Mexican president Claudia Sheinbaum.
- 10% tariffs against China have not been postponed and came into effect at 00:01 EST this morning.
- Beijing has announced retaliatory tariffs on US products, including a 10% tariff on crude oil, farm equipment and some vehicles, and a 15% tariff on coal and liquified natural gas (LNG).
European markets still jittery
European markets fell this morning as investors remain nervous about tariffs.
In the UK, the FTSE 100 was down 0.7%.
“With markets on a tariff tightrope, volatility looks set to stick around,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown.
Investors are still weighing up when and how Trump might set his sights on Europe – and what exactly he is trying to achieve. As yesterday’s developments show, the situation can change quickly.
“For those willing to ride the waves, there may be chances to cash in on overreactions, especially if Trump’s tariff bark proves worse than his bite,” Britzman added.
What do tariffs mean for the dollar?
The US dollar strengthened after Trump’s tariffs were announced over the weekend. It has since fallen back slightly after measures against Mexico and Canada were put on pause.
Tariffs usually strengthen a country’s home currency because they make it more expensive to buy and import foreign goods (which are priced in foreign currencies). This means fewer foreign goods are bought which, in turn, means less foreign currency is needed.
Ultimately, the dollar could strengthen even further if Trump’s tariffs result in higher inflation. Why? Because a resurgence in inflation could force the Federal Reserve to keep interest rates higher for longer. Generally speaking, a currency strengthens when interest rates go up and weakens when they go down.
Tariff threats: a headache for Diageo
Drinks company Diageo – the owner of brands like Guinness, Smirnoff and Johnnie Walker – announced its interim results today (4 February). The company’s shares are in the red after it ditched its medium-term growth guidance (5-7% organic net sales growth), blaming the current geopolitical environment.
The US is Diageo’s largest market, and chief financial officer Nik Jhangiani told analysts on the earnings call that around 45% of the company's net sales in the region come from products made in either Canada or Mexico. This includes the company’s tequila portfolio, as well as Canadian whiskey. With this in mind, Trump’s tariffs are a real concern.
Adam Vettese, market analyst at investment platform eToro, said: “Despite revenue coming in slightly ahead of forecast, the spectre of tariffs looming is a far bigger priority with the company particularly exposed.
“Bosses will be hoping for some kind of US-Mexico accord given they imported $1.6 billion worth of tequila into the states last year. The fact the firm has withdrawn any medium-term forecasts based on the potential impact of tariffs really demonstrates the gravity of the situation.
“Diageo has said they will take measures to try and mitigate the impact of tariffs, but realistically there’s a limit to what cost-cutting and inventory management can do when faced with such a mammoth additional expense.”
Shein and Temu could be hit as Trump closes tax loophole
In the executive order which imposes 10% tariffs on Chinese imports, Trump has included a footnote which closes a tax loophole known as “de minimis” rules.
Historically, this rule has allowed companies to avoid paying duties if their goods are valued at less than $800 and shipped directly to American consumers.
It has allowed Chinese companies like Shein and Temu to sell clothes and products at incredibly low prices.
Analysts have suggested that closing this loophole could benefit Amazon, with consumers buying low-cost items from the US giant instead.
Tariffs could add to existing pain for Chinese economy
The Chinese economy has run into some challenges in recent years, including a property market crisis and slowing growth. Tariffs from the US government now add another headwind to the mix.
Despite this, Kai Wang, market strategist at Morningstar, says the immediate consequences should be limited to specific sectors. These include home appliances, home furnishings, lithium batteries and EVs – all of which have "sizeable exposure to US revenue".
Will Trump and Xi Jinping strike a deal?
A White House advisor previously indicated that Trump and Chinese president Xi Jinping would speak today, however the latest report from the Wall Street Journal refutes this. If the two leaders do speak, it is possible that they will come to some kind of compromise.
"If not, China is likely to devalue its currency to offset the impact of tariffs, as it did in the first trade war," said George Brown and David Rees, both economists at Schroders. "The authorities will be mindful of the risk that a weaker currency exacerbates already-weak domestic sentiment. But the rapid imposition of tariffs also increases the probability of a larger fiscal stimulus to support domestic growth."
Thank you for following our live blog again today. That concludes our coverage for this evening.
We will be reporting live on other news topics this week, including the upcoming interest rate decision from the Bank of England. Our reporting there will begin tomorrow ahead of the announcement on Thursday.
Alternatively, for all things tech-focused, check out our live blog on the Magnificent Seven's earnings. Up tonight is Alphabet, which will be reporting its fourth-quarter results shortly after US markets close.
Trump to announce steel and aluminium tariffs
Good morning and welcome back to our live blog. Another week, another tariff threat from US president Donald Trump.
This time, the president has said he will announce 25% tariffs on all steel and aluminium imports. The move is expected to have the biggest impact on Canada – the largest exporter of steel and aluminium imports to the US. Mexico also exports a large amount of steel to its northern neighbour.
The latest threats come just one week after Trump threatened 25% tariffs on the two countries, before ultimately suspending the threat for a period of a month after coming to border-security agreements with Canadian prime minister Justin Trudeau and Mexican president Claudia Sheinbaum.
Announcement on retaliatory tariffs is also coming
Trump also said that he would make an announcement later this week on retaliatory tariffs. He indicated that these would be imposed on countries who tax US imports, saying: “If they charge us, we charge them”.
How much steel does the US import?
The US imported 28.9 million net tons of steel last year, according to figures from the American Iron and Steel Institute. The top three importers were Canada, Brazil and Mexico.
Overall, the US imports around a quarter of its steel.
Country | Steel imports in 2024 (net tons) |
Canada | 6.6 million |
Brazil | 4.5 million |
Mexico | 3.5 million |
South Korea | 2.8 million |
Vietnam | 1.4 million |
Japan | 1.2 million |
Germany | 1.1 million |
Taiwan | 1.0 million |
Netherlands | 0.6 million |
China | 0.5 million |
Romania | 0.5 million |
Turkey | 0.4 million |
United Arab Emirates | 0.4 million |
Italy | 0.3 million |
Spain | 0.3 million |
All other | 3.8 million |
Source: American Iron and Steel Institute, based on preliminary Census Bureau data.
How much aluminium does the US import?
The US imported 5.4 million metric tons of aluminium last year, with more than half of this (3.2 million) coming from Canada. The next two biggest importers were the United Arab Emirates (0.3 million) and China (0.2 million), according to data from the US government.
Overall, the US imports around half of its aluminium.
What do Trump's tariffs mean for markets?
“Trump's tariffs on steel and aluminium sold into the US are negative for markets on two levels,” says Russ Mould, investment director at AJ Bell.
“First, it suggests the new US president has only just got started with America’s budding protectionist trade policy. Second, it extends the affected countries beyond Canada, China and Mexico to places like Germany, Brazil, Japan and South Korea.”
He adds: “With the promise of further tariffs later this week, Trump’s actions threaten to cause considerable volatility on the markets over the coming days if there is a tit-for-tat response from affected countries."
Despite this, global stock markets have taken the latest announcements in their stride so far on Monday. Trump quickly U-turned on his threats against Canada and Mexico last week, so it is possible investors are taking a 'wait-and-see' approach.
Impact on the UK steel industry
According to a report from the House of Commons Library, published in October 2024, the UK steel industry contributed £2.3 billion to the UK economy in 2023. This is equivalent to around 0.1% of total UK economic output and 1% of manufacturing output.
In other words, the steel industry isn’t a huge part of the domestic economy, but it is still made up of more than 1,000 companies and supports 40,000 jobs.
The industry has faced challenges in recent years. Excess capacity in the international steel market has driven prices down but costs still remain high. Making steel is incredibly energy intensive, and electricity prices in the UK are higher than in some other countries.
Against this backdrop, US tariffs (if imposed on the UK) could create further pain.
Around one tenth of the UK’s total steel exports were sent to the US last year, according to news outlet Politico. Trade association UK Steel has said that tariffs would be a “devastating blow”, if imposed.
Gold price hits a record high
The gold price has soared to another record high, exceeding $2,900 for the first time today. The latest upward movements have partly been driven by safe-haven buying in response to Trump's tariff threats. Investors are concerned that tariffs could push costs up for businesses, potentially denting profits. If businesses look to pass these costs on to consumers, it could also push inflation higher. Gold is often seen as being a good hedge in periods of market volatility and inflation.
Trump signs tariffs on aluminium and steel
Reports have emerged in the last hour that Trump has now signed a proclamation announcing 25% tariffs on aluminium and steel, as widely anticipated.
The BBC reports him saying: "Today, I'm simplifying our tariffs on steel and aluminium. It's 25% without exceptions or exemptions".
Steel and aluminium tariffs go further than in 2018
During his first term as president, Trump imposed a 10% tariff on aluminium imports and 25% on steel imports, effective from 2018. However, some of these measures have since been pulled back.
Trump ultimately reached a deal with Canada and Mexico a year later, exempting them from the levies.
Joe Biden then introduced further exemptions during his term as president, striking deals with the EU, Japan and the UK to allow them to export a certain amount of the metals to the US tariff-free.
The announcement from Trump today undoes any such exemptions.
Speaking from the Oval Office, Trump said the reintroduction of these tariffs was the beginning of "making America rich again".
More pain for consumers
Trump's argument that tariffs will "make America rich again" contradicts arguments laid out by most economists, who counter that it is usually consumers who pay the price when tariffs are imposed.
A general rule that has been quoted by economists at Goldman Sachs, among others, is that each time the average tariff rate goes up by one percentage point, the rate of core US inflation goes up by around 0.1 percentage points.
More tariffs to come...
Speaking from the Oval Office this evening, Trump indicated that future tariffs could also be announced on cars, pharmaceuticals and computer chips.
That's all for tonight, but we will be back with further news and analysis tomorrow morning. Thank you for joining us.
Market response to Trump’s tariffs
Good morning and welcome back to our live blog. Let’s take a look at how markets have responded to Trump’s proclamation on steel and aluminium last night.
There was some volatility in Asian markets during trading hours on Tuesday as investors digested the implications of Trump’s steel and aluminium tariffs. The Hang Seng Index fell 1.06%, while the Shanghai Composite Index closed 0.12% lower.
In Australia, the ASX 200 ended the day roughly where it started, just 0.01% higher. One constituent, Mineral Resources Ltd, fell 6.93% during the session. The company mines iron ore – one of the main ingredients in steel.
In Europe, markets have largely shrugged off the latest news so far. The CAC 40 (France) and the DAX (Germany) are both in the green this morning, at the time of writing. In the UK, the FTSE 100 hit another record high this morning but has since fallen back.
US markets have not yet opened for trading today, but S&P 500 futures suggest the index could edge lower.
How significant are the latest tariffs in the context of world trade?
Analysis from consultancy Capital Economics suggests the broader economic impact of steel and aluminium tariffs might not be that significant.
“According to data from Intracen, trade in aluminium, steel (and iron) makes up just 3% of world trade even including fabricated products like drums and cans. And within that, exports to the US are just 0.25% of world trade, so these tariffs in themselves are no game-changer,” economists Jennifer McKeown and Hamad Hussain write.
When you drill down to individual economies, Canada is the most exposed country, with impacted exports accounting for around 1% of its GDP. Meanwhile, the impact on China will be “negligible”.
McKeown and Hussain explain: “The US already has high tariffs on Chinese steel (47.5%) and aluminium (32.5%), which means that trade is already limited and the incremental impact of even higher tariffs should be small.
“While China did still send $2.5bn worth of the metals to the US last year, this represents just 0.5% of its exports to the country and 0.01% of its GDP.”
"The big one": are reciprocal tariffs coming?
The latest announcement from Donald Trump suggests that the global trade spat he’s been spoiling for could be imminent.
“THREE GREAT WEEKS, PERHAPS THE BEST EVER, BUT TODAY IS THE BIG ONE: RECIPROCAL TARIFFS!!! MAKE AMERICA GREAT AGAIN!!!” the president posted on his social media platform, Truth Social, earlier today.
“Very simply it's if they charge us, we charge them,” Trump told reporters on Sunday. Effectively, any country that charges tariffs on US imports will have similar levies imposed on their exports to the country.
Trump will provide more detail at a press conference taking place in the Oval Office today at 1pm Eastern time.
Stay tuned tomorrow, as we bring you the detail on what was announced, and how the markets react.
Reciprocal tariffs: what we know
Good morning, and welcome back.
Donald Trump announced his much-anticipated reciprocal tariff regime yesterday. The US president has directed his top trade advisers to devise tariffs on a country-by-country basis, based on the tariffs that those countries charge on US imports, as well as factors such as exchange rates and trade balances.
The memo directing Trump’s advisers asked them to report with a plan within 180 days.
“In almost all cases, they're charging us vastly more than we charge them,” said Trump, adding that “those days are over".
Stay tuned for analysis on the countries that could see the biggest impacts from Trump’s tariff regime.
Which countries will be most affected by reciprocal tariffs?
Trump’s reciprocal tariffs directive replaces a previously proposed imposition of blanket tariffs of 10-20% on all imports into the US. Instead, reciprocal tariffs will likely be based on the tariffs that countries levy on US imports as well as factors like VAT regimes and trade imbalances.
That shifts the picture away from regions like Canada, Mexico and Europe, but has significant implications for Asian and Latin American economies.
“The countries that would feel the real impact of a fully reciprocal tariff policy aren’t the US's biggest trading partners,” says Lale Akoner, global market analyst at eToro. “In fact they’re Asian economies such as India, Indonesia, Thailand, and Latin American countries such as Brazil. That is because these countries impose more tariffs on the US than the US imposes on them.”
We’ll take a closer look at these regions today, and explore the countries that could see the greatest impact.
Asia: reciprocal tariffs put India in the crosshairs
Without knowing the details of what reciprocal tariffs will consist of, there is a degree of speculation about which particular countries will be hardest-hit.
However, India could be one to keep an eye on based on what we know so far.
“Based on a simple calculation that sums VAT rates and the difference in tariff rates, India emerges as the country within Asia that would be hit hardest by a new tariff regime,” writes Gareth Leather, senior Asia economist at Capital Economics.
While most countries in Asia would be harder-hit under the reciprocal tariff regime than they would have been by a blanket 10% tariff, Pakistan, Thailand and Vietnam stand out as the three besides India with a particularly high combination of VAT and tariff discrepancies with the US.
Leather hints, though, that as with previous tariff announcements, this could be another trademark Trump negotiating tactic.
“As we have highlighted previously, Trump has shown a willingness to strike deals,” he writes. “It is notable that India recently cut import duties on imports of motorbikes and bourbon whisky, and yesterday agreed to start trade talks with the US.”
Currency markets unfazed by reciprocal tariff threat
The expectation yesterday was that currency markets might price in upcoming tariffs on the countries likely to be affected, via FX.
However, so far today the reaction in FX markets has been subdued.
“We have seen muted trading of the currencies of countries to be affected the most – India, Indonesia, Thailand and Brazil – in case of a reciprocal tariff,” Lale Akoner, global market analyst at eToro, tells MoneyWeek. “This suggests that traders still see the latest announcements as just a negotiating tool ("escalate to de-escalate").
“Overall, markets currently think that tariffs will be selectively implemented and the US is looking to negotiate first,” she adds.
Trump tariffs and gold prices
One of the tariff announcements this week focused on the key industrial metals steel and aluminium.
But how have tariffs, or the threat of them, impacted precious metals, particularly the price of gold?
“Trump's approach to tariffs is creating a lot of uncertainty in the world's economies, including the United States,” says Stephen Mullowney, CEO of gold mining company TRX Gold. “Gold is seen as a safe haven in uncertain times and is very liquid; thus, it has received a boost in price.
“Trump’s tariffs and threats have also raised the value of the US dollar compared to other currencies.” This has meant that gold prices in non-dollar currencies, like pound sterling, have increased even further.
Finally, and perhaps most importantly, the potentially inflationary impacts of tariffs are a further impetus to the gold price.
“There is an expectation that inflation will remain high in the United States due to the tariffs increasing the cost of goods potentially combined with tax cuts," says Mullowney. "Gold has historically been a good hedge against inflation.”