Trump's Proposed Auto Tariffs: A Blow to Platinum Group Metals Demand

As President-elect Donald Trump prepares to assume office, his proposed auto tariffs have sparked concern among investors and industry experts alike. One sector that could feel the heat is the platinum group metals (PGMs) market, which plays a crucial role in the automotive industry. Let's delve into the potential impacts of these tariffs on PGM demand and the investment landscape.



Trump's proposed 25% tariff on imports from Canada and Mexico, along with a 10% tariff on goods from China, could significantly disrupt the supply chain for PGMs in the automotive industry. Canada and Mexico are major suppliers of PGMs to the US, accounting for approximately 20% of finished vehicle imports and 50% of parts to the US. These tariffs could increase production costs for US manufacturers, making them less competitive in the global market.

The interconnectedness of the North American auto industry means that tariffs could be damaging for PGM demand. Assuming the maximum negative impact, North American automotive platinum demand would shrink by 97 koz, and palladium by 362 koz, which is 1% and 4% of total global demand, respectively. This reduction in demand could lead to a decrease in PGM prices, making it less attractive for investors to hold these metals.

However, the potential supply chain disruptions and price fluctuations in the PGM market could also create opportunities for investors. The anticipated supply deficits and increased demand for PGMs, particularly in the hydrogen sector, could drive up prices and create a favorable investment environment. Additionally, the tariffs could encourage domestic production of PGMs, stimulating new investments in the industry and potentially driving up PGM prices.



Investors in the PGM market should carefully consider the potential opportunities, risks, and long-term strategic implications of the proposed tariffs. The disruption in supply chains, increased prices, and shift in demand and supply dynamics could introduce risks and uncertainties, such as potential retaliation from other countries, disruptions in supply chains, and increased competition for PGM supplies.

In conclusion, Trump's proposed auto tariffs could significantly impact the global distribution and consumption of PGMs, with strategic implications for investors in the PGM market. Investors should stay informed about the potential opportunities, risks, and long-term strategic implications when making investment decisions in the PGM market. By doing so, they can navigate the complex landscape of the PGM market and make informed decisions about their investments.