Silver Market Under Strain as Trump Tariffs Kick In
The global silver market is feeling the pressure. Trade tensions are climbing, and with them, the cost of borrowing silver is spiking. Markets are reacting fast to looming tariffs from President Trump, creating fractures across global metal flows.
The latest warning sign? A surge in lease rates — the cost to borrow silver short-term — now topping 6%. Traders are racing to ship physical silver to the U.S. to take advantage of higher futures prices in New York. That’s draining supply from London and pushing lease rates even higher.
This isn’t just about silver. Gold’s caught in the mess too. But silver, being bulkier and harder to move quickly, is at greater risk of getting bottlenecked.
Dislocation and Demand Collide
So far in 2025, spot silver is up 17%, making it one of the top-performing commodities. New York futures have climbed even more, creating rare pricing gaps between key markets. The reason? Fear. Trump’s tariff threats have traders scrambling for safe assets and arbitrage opportunities.
Physical silver is leaving London in bulk. Tariffs aimed at Canada and Mexico — which supply about 70% of U.S. silver — are making U.S. vaults the destination of choice. Gold moves by air. Silver travels slow, usually by ship. That lag matters now.
Inventory Tension Building
In London, silver stockpiles are thinning. What’s left is increasingly tied up in ETFs. Meanwhile, U.S. inventories are ballooning. COMEX stockpiles have jumped 40% this quarter — the biggest increase in over three decades.
But that flow can reverse, and fast. If London runs dry, shipping silver back will take time. BMO’s George Heppel puts it plainly: if we see a “silver squeeze,” these sluggish trade routes will make the problem worse.
Tariffs Could Break the Flow
The Trump administration’s aggressive tariff strategy is hitting silver hard. Canada has already fired back with 25% countermeasures on a broad set of U.S. goods, including silver. Trump, for his part, is aiming for more tariffs by April 2.
Citigroup warns the market might be underestimating what’s coming. If reciprocal tariffs hit silver directly, prices could spike — especially if volatility persists. As Citi analysts note, the metal is unlikely to dodge these levies.
TD Securities agrees. Daniel Ghali, senior strategist, flags the risk: “If retaliation is one-to-one, Canadian silver gets hit. That’s 20% of U.S. imports. Even if the trade dust settles, the uncertainty won’t.”
Where It Stands Now
Spot silver is trading just above $34 an ounce. COMEX futures are nearly 70 cents higher. That gap tells you everything: supply chains are distorted, uncertainty is priced in, and traders are positioning for more.