The next "hot target" for US tariff increases: platinum group metals
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U.S. critical minerals policy is undergoing significant adjustments, and platinum group metals face a notable risk of being subjected to Section 232 tariffs.
On October 22, according to ZF Trading Desk, Deutsche Bank stated in its latest research report that in the critical minerals report soon to be submitted by the U.S. Secretary of Commerce, platinum and palladium are the most likely precious metals to be recommended for tariff action, due to highly concentrated supply chains, high external dependency, and rising geopolitical risks in major supplier countries.
The report states that the Secretary of Commerce’s critical minerals report for Executive Order 14272 is overdue. This report will assess the national security impact of imports of critical minerals including platinum, palladium, and newly added silver. Meanwhile, the U.S. International Trade Commission’s preliminary anti-dumping ruling on Russian palladium was scheduled for release on October 20. Palladium faces a double policy risk and could be affected by both decisions.
According to Deutsche Bank’s policy risk scorecard, platinum and palladium score highly across multiple dimensions such as global supply concentration, import dependence, supplier country risk, and economic impact on the U.S., far surpassing other metals like copper. Considering that Secretary of Commerce Raimondo openly supports using tariffs as a tool to stimulate U.S. manufacturing, the likelihood of platinum group metals being recommended for Section 232 tariff actions has significantly increased.
The bank believes that these potential trade restrictions will intensify the already evident supply tightness in the white precious metals market. Currently, lease rates for platinum group metals are higher than normal, and operational costs for industrial users are rising. Earlier this month, renowned refining and recycling company Umicore chose to sell its long-held gold inventory and switch to leasing, highlighting market pressure.
Evolution Logic of the Critical Minerals List
The research report points out that the U.S. Geological Survey’s critical minerals list originated from Executive Order 13817 issued during Trump’s first term in 2017, titled "A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals." This order required formulating a list of critical minerals within 60 days and developing an interdepartmental strategic plan led by the Department of Commerce within 180 days.
The 2019 federal strategy document emphasized the entire critical minerals supply chain, including processing and manufacturing, not just mining capacity. The report placed economic and military concerns on equal footing, believing that both were strategically vulnerable to supply disruptions.
The document specifically mentioned "foreign trade practices that distort the market," referencing potential responses under Section 301 of the 1974 Trade Act and possible measures under Section 232 of the 1962 Trade Expansion Act related to national security.
The 2022 second edition of the list introduced important methodological updates. The supply concentration index now considers not only a country's global production share but also disruption potential, supply capability index, and supply willingness index.
The supply capability index is based on the Fraser Institute’s Policy Perception Index, assessing political stability, security, infrastructure, trade barriers, and other factors of the producing countries. The supply willingness index evaluates a producer country’s trade, ideological, and defense relationships with the United States.
The 2025 third edition of the list adopted a more data-intensive and industry-level U.S. economic impact assessment method, abandoning the quantitative indicators of supply concentration and net import dependence from the first two versions, and instead emphasizing the quantifiable economic impact on U.S. GDP.
High Risk Ratings for Platinum Group Metals
According to Deutsche Bank’s policy risk scorecard, platinum and palladium show high risk scores across multiple dimensions. Specifically:
In terms of global supply concentration, platinum's Herfindahl-Hirschman Index (HHI) reaches 5,230, palladium’s is 3,137—both well above the high concentration threshold of 2,500. In contrast, silver is 1,139, gold only 481, and refined copper 1,035.
In terms of net import dependency, platinum’s net import ratio is 85%, exceeding the high-dependence threshold of 50%. Silver is at 64%, also above the threshold. Palladium is at 36%, refined copper 45%, both below the threshold. Notably, the United States is a net exporter of gold.
In terms of import supply concentration, platinum’s import HHI is as high as 4,215, palladium’s is 3,301, silver’s is 2,833, and refined copper’s is 4,640, all surpassing the high concentration threshold of 2,500. Gold’s import HHI is 1,457, relatively low.
In terms of supply capability index, South Africa (the main supplier of platinum) has a risk score of 81, Russia (the main supplier of palladium) 90, both considered high risk. Mexico (main supplier of silver) has 60, medium risk. Canada (main supplier of gold) scores 33, Chile (main supplier of refined copper) 34, both low risk.
Policy Tools: Tariffs or Industrial Support?
The U.S. has adopted non-tariff strategies in the development of the rare earth supply chain. In July 2025, the Department of Defense announced a public-private partnership with MP Materials, including direct government investment via convertible preferred shares and warrants, federal loans for heavy rare earth separation expansion, a 10-year off-take agreement with a magnet manufacturing facility scheduled to start operation in 2028, and a 10-year price protection agreement for neodymium-praseodymium oxide products at $110/kg.
This week, the United States and Australia announced the "Critical Minerals and Rare Earth Mining and Processing Supply Assurance Framework," committing to provide $1 billion in financing within six months for projects in the U.S. and Australia, and establishing pricing frameworks with price floors or similar measures.
These policies align with the Bipartisan Policy Center’s proposed principles for federal critical minerals investment:
Flexible financial support to mitigate price risk, long-term demand certainty, and strategic alignment with national security objectives. Price guarantee policies are logically superior to tariffs, as they enable the payment of prices above the long-term marginal cost when international prices are too low, and avoid unnecessary cost increases for domestic downstream manufacturers when international prices are high.
However, U.S. Secretary of Commerce Raimondo is a supporter of tariff policies under the current president. She advocates that tariffs will benefit American manufacturers without raising consumer prices. This stands in stark contrast to standard rare earth policy practices.
The report notes that copper provides a relevant policy precedent: in February 2025, the president issued an executive order launching a Section 232 investigation; on June 30, the Department of Commerce submitted a report stating "import volume and global overcapacity are undermining the economy"; by July 30, tariffs were imposed on semi-finished copper and copper derivatives (tariffs on refined copper were delayed). This rapid timetable could be replicated for platinum group metals.
Deutsche Bank believes that for platinum group metals, the Secretary’s report is already overdue, with the original 180-day deadline beginning from the April 15 executive order already surpassed. A U.S. government shutdown could further delay the timeline. But based on the scorecard analysis and the Secretary's policy tendencies, platinum and palladium face a significant risk of being recommended for Section 232 tariffs, silver faces a moderate risk, and gold a relatively low risk.
Currently, the platinum group metals market is already showing signs of supply tightness. Higher-than-normal lease rates are increasing operational costs for industrial users, and many are choosing to lease rather than own metals. This month, Umicore chose to sell its long-held gold inventory and switch to leasing, reflecting market pressure.
Deutsche Bank points out that if the U.S. imposes Section 232 tariffs on platinum and palladium, supply chain pressure will further intensify. South Africa is the world's largest platinum producer, with 2024 output of about 120,000 kg, dominating global supply. Russia is the largest global palladium producer, 2024 output around 75,000 kg. U.S. imports of platinum from South Africa account for nearly 50% of its total platinum imports; a similar proportion for palladium imports from Russia.
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The above content comes from ZF Trading Desk.
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