Citi Commodities Strategy highlight the potential underestimation of tariff risks on silver Exchange for Physical (EFP) pricing. The firm pointed out that the market might not be fully accounting for the possibility of the U.S. imposing more substantial tariffs than anticipated on April 2nd.

Commerce Secretary Howard Lutnick has been notably outspoken on the subject, suggesting that the U.S. could implement reciprocal tariffs as a baseline, with the potential to generate $700 billion in revenue. This could translate to a 15-20% increase in the weighted average tariff rate.

Lutnick’s comments, made during a CBS interview available on YouTube on March 12th, and a FoxNews segment on February 20th, contrast with less aggressive stances taken by other members of the Trump administration. President Trump himself has referred to the proposed tariff measures as "aspirational," suggesting a softer approach might be on the horizon.

Despite the differing views within the administration, Citi expressed skepticism that the market could price in much less tariff risk into the silver EFP than what is currently reflected. The firm emphasized that tariffs are expected to be implemented in some form, and uncertainty is likely to persist even after the April 2nd announcement.

Citi further speculated that if the tariff announcement turns out to be more dovish than expected, with a gradual rollout or a focus on negotiations, the market might still retain some premium for potential future tariff risks.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.