An under-appreciated aspect of policymaking in any Trump administration is the (I think incontrovertible) fact that in a plurality of cases (at least) they don’t know what they’re doing, haven’t thought things all the way through or both.

In the Trumpian context, we tend to attribute “shocks,” surprises and suboptimal outcomes everywhere and always to malice, but malicious people screw up on accident too just like the rest of us. And just like we everywhere and always give “good” people the benefit of the doubt (i.e., “People make mistakes”), we never extend the courtesy to “bad” people.

I’m not necessarily suggesting the Trump administration isn’t fully cognizant when it comes to tariffs on gold imports, but… well, don’t be surprised if the levies, seemingly confirmed by CBP to extreme consternation among participants in the gold market, are ultimately modified or rolled back altogether, replaced by an exemption for bullion.

This story was front-page news briefly on Friday morning. By the end of the day — and perhaps even by the time you read this — Trump might’ve said or done something more egregious, pushing gold below the digital fold, but however fleeting this proves, it’s worth a mention.

As the figure shows, gold hit a record on Friday, on pace to notch a 3% gain for the week. Prices are also supported by Trump’s decision to install, temporarily, Stephen Miran in Adriana Kugler’s vacant Fed governor seat, guaranteeing rate cuts after at least two of this year’s final three FOMC meetings (assuming quick Senate confirmation for Miran).

What, exactly, is going on with Trump, gold and tariffs? Well, it’s simple. The US indicated that one-kilo and 100-oz gold bars are, in fact, subject to Trump’s so-called “reciprocal” tariffs, including the 39% levy on Switzerland where most of the world’s refining takes place.

If the administration sticks to that, it’s a problem. US-traded gold futures are deliverable, adjective. Trump’s proposing, inadvertently or not, to tariff the deliverable, noun. This was a surprise, to put it mildly, for an industry which assumed it’d be exempt given the unique role of gold.

I should emphasize: It’s certainly possible this is intentional — part of Trump’s pressure campaign on the Swiss. Trump’s economic worldview is defined by an aversion to trade deficits. Obviously, swings in bilateral trade between the US and Switzerland are correlated to the gold trade.

In Q1, for example, US imports of Swiss bullion surged as enterprising traders looked to capture an arb created by tariff uncertainty. When gold was exempted (or assumed exempt), that distortion disappeared. Now, everyone’s right back to pondering the prospect of a draconian levy on Swiss-processed, one-kilo gold bars, the Comex go-to and the denomination which makes up most of America’s bullion imports from Switzerland.

The SNB says this is crazy. That oscillations in Swiss gold exports to America shouldn’t be considered for the purposes of refining (no pun intended) the US-Swiss trade relationship. They’re right, of course, but Trump will be Trump.

Long story short, this ain’t gonna work. Gold’s fungible. If you try to tax one or two denominations and not the rest of it and/or if you tax it differently based on the processing country of origin, you’re going to create all sorts of weird dislocations and arbs, you might ruin some futures contracts altogether and you’ll be blamed for generalized chaos.

So, again, I suspect this problem will resolve itself in relatively short order, where that means Trump will exempt gold. If he doesn’t, he’ll be sued.