This Saturday the verdict arrives: what will happen to silver, platinum, and palladium in the face of US tariffs?

The countdown has begun. This Saturday (January 10, 2024, UTC+8), the results of the investigation into the Section 232 tariffs on critical minerals in the US will be announced, a decision that promises to shake up the precious metals market. Chase the Wind Trading Desk warns that volatility will reach new highs, especially in Comex quote prices and in platinum group metals.

The tariff dilemma: two scenarios, two radically different outcomes

Citi’s research team led by Kenny Hu has mapped out two possible paths:

If there are no tariffs: Metals would flow massively from the United States to other regions, suddenly alleviating the current liquidity crisis. The London spot market would experience a significant price correction, while the extreme tension currently characterizing the sector would ease.

If tariffs are imposed: Markets would enter a selective panic. There would be a window of about 15 days for implementation, triggering “hoarding” behaviors in the US territory, driving up the reference price and widening the EFP (Exchange for Physical) premium before tariffs take effect. Afterwards, with reduced imports, the supply of non-US metals would gradually improve, ultimately easing pressure on the London spot.

Citi’s conclusion has an important nuance: given the volume of products involved, Trump’s actions could be indefinitely delayed, extending the period of uncertainty and prolonging the bullish rally in silver and platinum group metals.

Market bets are already on the table

Until January 7 (UTC+8), the EFP price fixing revealed the market’s implicit expectations: platinum near 12.5%, palladium around 7%, and silver close to 5.5%. These rates are not random numbers; they reflect collective anxiety over an event that will rewrite the rules of the game.

Can silver escape tariffs?

Citi points to a baseline scenario where silver would avoid tariffs, arguing that the US depends heavily on imports of this metal. Even if tariffs are imposed, exemptions would be granted to major suppliers like Canada and Mexico.

The evidence lies in lease rates. Historically high levels demonstrate that the global silver market suffers from a severe physical shortage outside US territory. An absence of tariffs would catalyze a flow of metals from the US, relieving tension in global supply chains.

Here’s the interesting part: the timing of the decision could synchronize with the annual index rebalancing. The Bloomberg Commodity Index (BCOM) will rebalance between January 8 and 14 (UTC+8). Citi projects a silver outflow of approximately $7 billion — equivalent to 12% of open positions in Comex — which would act as a temporary anchor on prices, also weakening investment demand in ETFs.

Palladium: the main candidate for severe tariffs

Among the three metals, palladium emerges as the most vulnerable to high tariffs. There are two reasons:

Potential for domestic supply expansion: The US can increase domestic palladium production by expanding nickel mining and platinum refining, reducing dependence on imports. This provides political viability for tariffs from an industrial sovereignty perspective.

Powerful industrial lobbying: Manufacturers of automotive catalytic converters and mining companies exert significant political pressure to protect local markets and incentivize internal investment.

If Citi is correct and high tariffs — say 50% — are imposed, platinum and palladium prices would spike in the short term. The import cost in the US would multiply, pushing reference futures and expanding the EFP spread.

In the long run, a “dual-level market” will emerge: the US would become a high-price market, with systematic premiums over London (the global pricing center). This gap would reflect the tariff rate plus logistical and financing costs, reconfiguring global trade flows. Global palladium would flow toward regions without tariffs, while the US market would rely more on internal supply and potential exempt sources.

Platinum: the unknown

Will platinum be taxed? Citi simply describes it as “throwing a coin.” The US depends even more on platinum imports and has limited room to increase domestic supply, reducing the likelihood. However, it could be hit along with palladium.

A revealing detail: platinum and palladium inventories at the New York Mercantile Exchange remain near all-time highs. Recently, ETFs of platinum group metals recorded strong inflows, worsening physical shortages. Managed fund positions according to CFTC turned bullish for the first time since 2022.

This Saturday, the market awaits answers. Meanwhile, volatility and uncertainty will continue to write the story of platinum prices and its group companions.