Incorporating critical minerals, is the U.S. going to "grab silver" next?

The United States Geological Survey (USGS) proposed to include silver and five other minerals in the 2025 critical minerals list. Citigroup believes this move will create conditions for silver import tariffs.

As mentioned in a previous article, the USGS proposed on Monday to add six minerals, including copper, silicon, silver, and potassium, to the draft of the 2025 critical minerals list, stating that these resources are vital to the US economy and national security. The draft has been published in the Federal Register and will be open for public comment for 30 days.

On August 28, according to news from the Chasing Wind Trading Desk, Citigroup stated in its latest research report that this expands the scope of the US Section 232 investigation to 56 types of metals and minerals. Analysts pointed out that once silver is included in the critical minerals list, it will face potential Section 232 tariff investigations, with import tariffs possibly reaching up to 50%.

Citigroup's research team stated that the current exchange-traded futures premium (EFP) for silver and palladium is only 2-3%, which significantly underestimates the tariff risk in the US.

The bank emphasized that if the US imposes import tariffs of up to 50%, the price spread will significantly widen. Citigroup maintains a bullish expectation for silver to reach $43 per ounce in the next 6-12 months.

Silver Becomes the Focus of Tariffs

Citigroup stated that silver's strategic position is continuously enhanced under the dual drive of industrial and investment demand. As the US seeks to reduce its reliance on imports, silver's status as a critical mineral will further strengthen its price support.

The bank's analysts believe that its inclusion in the critical minerals list will significantly change the market landscape. According to Citigroup's estimates, the US's reliance on silver imports is as high as 64%, and once tariff measures are implemented, it will create considerable arbitrage opportunities for COMEX silver futures.

The bank recommends holding long positions in COMEX silver to seize the potential price increase opportunities brought about by import tariff risks.

Citigroup maintains the expectation that silver prices will rise to $43 per ounce in the next 6-12 months and believes that the current futures premium levels do not fully reflect the likelihood of tariff implementation.

Palladium Faces Dual Tariff Risks

In addition to silver, Citigroup analysts are also optimistic about arbitrage opportunities in palladium. The US Department of Commerce initiated an anti-dumping investigation on palladium from Russia on August 19, coupled with the critical minerals Section 232 investigation, palladium faces dual tariff risks.

The research report stated that US domestic producers lobbied for palladium tariffs in early August. Although palladium is currently not affected by US sanctions against Russia or broader import tariffs, Citigroup analysts believe that the possibility of broader palladium import tariffs based on the critical minerals Section 232 investigation is rising, which will have a greater impact on prices.

For industrial metals such as nickel, zinc, tin, and lead that are within the scope of the investigation, Citigroup pointed out that their physical premiums in the US also face upward risks. Tariff concerns may prompt more US importers to procure in advance to avoid tariffs, which will drive up premium levels Citigroup research shows that the final report of the ongoing Section 232 critical minerals investigation will be released on October 19, which may impose import tariffs of up to 50% on as many as 56 types of metals and minerals, or take non-tariff measures such as producer subsidies