As global trade tensions continue to mount, particularly with incoming U.S. President Donald Trump's looming trade policies, copper and silver markets are witnessing a significant divergence in price dynamics. Traders have ramped up their bets on the imposition of hefty import tariffs on metals, anticipating that the new administration's "America First" approach could disrupt global supply chains, pushing U.S. prices higher.

In the silver market, the gap between New York’s Comex silver futures and London spot prices has widened dramatically. Comex silver is trading at a premium, nearing its highest point since December, driven by concerns over Trump’s plans to implement tariffs on critical goods, including metals like silver and copper. This move has added to the uncertainty that traders are grappling with as they try to predict the future trajectory of global trade relations. This price discrepancy is linked to heightened anxiety about the scope of Trump’s tariffs, which could affect major trading partners such as China, Mexico, and Canada.

A similar trend is emerging in the copper market, where Comex copper futures are also commanding a significant premium over prices set on the London Metal Exchange (LME). The rising premiums reflect a surge in copper shipments to U.S. warehouses, as traders rush to capitalize on the price gap, echoing the market dynamics seen during last year’s copper squeeze. The situation has created opportunities for traders who can quickly deliver metals into U.S. warehouses but has also introduced risks for those without immediate access to the physical metal.

The divergence in prices between the New York and London markets is raising concerns among arbitrage traders, who typically profit by betting on the convergence of price differences. Historically, these gaps are short-lived, as traders exploit the price differences, but this time, the uncertainties surrounding tariffs and potential supply disruptions have made it harder for these trades to close as quickly as usual. This presents significant risks, especially for those holding positions in markets where supply is limited.

Daniel Ghali, senior commodity strategist at TD Securities, warns that the silver market, in particular, is on the brink of another squeeze, exacerbated by a reduction in global silver stockpiles. While silver can be shipped from London to New York, the limited availability of metal combined with the logistical lead time for transportation could result in a significant supply shortfall. This, in turn, could trigger another round of price surges, as investors scramble to secure available supplies before they are exhausted.

As traders and investors navigate these unprecedented market conditions, the growing disconnect between U.S. and international metal prices reflects not only the potential impact of Trump’s trade policies but also the vulnerability of global supply chains to shifting political and economic landscapes.