A storm is brewing, and, to paraphrase the 2000 film it is forming to be the Perfect storm.
The first ripples started on 1 Feb, 2025 when President Donald Trump signed an executive order that imposed a 25% tariff on all goods from Mexico and Canada except Canadian oil and energy exports. Canada retaliated with its own 25% counter-tariff on 4 March, 2025.
The United States produces only 17% of its silver needs. Mexico provides approximately 44% of US silver needs, and Canada follows in number two spot at roughly 17%.
Not surprisingly, the stock markets went into a frenzy and created the second wave of excitement. Investors started to dump their stock holdings and invested in gold. As a geologist might suggest: As goes gold prices, so goes silver. On the eve of Trump’s tariff announcement, the spot silver price was $45.54 CAD. As of this writing, on 12 Nov, the spot silver price had risen to $74.62 CAD. This increase just raised the wave weight by some 61%. The storm is brewing.
The flow of costs ebbs and flood much akin to a Bay of Fundy tide. The silver is mined in Canada, sold to a United States processor when 25% tariff is added upon import to the US. The processor then produces silver nitrate and exports it back to Canada where an additional 25% is added under HS Code Tariff Item 7106.92.00 (Silver (including silver plated with gold or platinum), unwrought or in semi-manufactured forms, or in powder form.) The total tariff cost is increasing the price of silver by 56.25%.
The tsunami is fully formed when one recognizes the shipping companies base their brokerage fee as a percentage of the product cost being imported. Next up is the federal GST of 5%, or for those unfortunate souls on the harmonized tax add an additional 15%.
The question thus becomes: Is there a lifeboat that can be tossed to the photographer to ride out this storm? It doesn’t appear so when one considers the external pressures in the supply chain.