Silver supply at risk as USMCA talks stall on Mexico's $197B trade gap

Silver faces a supply-side threat after the US declined to renew the USMCA in its current form, putting roughly 20% of global mine output under trade uncertainty.

"We did not agree to renew the USMCA in its current form," US Trade Representative Jamieson Greer said Wednesday at the Aspen Institute Security Forum, citing a $197 billion US trade deficit with Mexico that grew 17% last year.

Mexico is the world's largest silver producer, accounting for about 20% of global mine supply, according to US Geological Survey data. The US and Mexico are due to hold a third round of formal bilateral USMCA negotiations next week in Mexico City. Greer said he has a mandate from President Trump to use tariffs, quotas or other measures to bring the structural deficit "under control."

Silver traded at $56.11/oz as of 8:43 a.m. ET, down 2.88% from the prior session and 19.89% lower than a month ago, though still 48% above year-ago levels. The metal's all-time high of $121.58, set Jan. 29, is more than double the current price. A disruption to Mexican supply — which feeds into electronics, solar panel manufacturing and investment demand — could tighten the physical market at a time when COMEX inventories are already under scrutiny.

Mexico's Silver Leverage

Mexico produced an estimated 6,400 tonnes of silver in 2025, roughly 20% of the global total, according to USGS data. The country's mining sector is heavily export-oriented, with the US as the primary destination for refined silver and silver-containing products. Any tariff or quota imposed under a renegotiated USMCA would directly raise costs for US importers of Mexican silver and potentially redirect supply flows to Asia or Europe.

The Trump administration's proposal during May's bilateral talks to require 50% of the value of North American-built vehicles to originate in the US points to a broader push to tighten rules of origin across strategic sectors. Greer said he wants stricter content requirements for industrial goods, electronics and pharmaceuticals — categories that overlap with silver's industrial applications. By contrast, talks with Canada have yielded no concessions, with Greer describing weekly discussions as "just talk."

Silver's Price Context

Silver has swung between an intraday high of $121.58 and a low of $36.21 over the past 52 weeks, a range that shows its volatility relative to gold. The gold-to-silver ratio currently stands near 50, compared with a historical average closer to 70, suggesting silver has outperformed gold on a relative basis over the past year. COMEX silver inventories stood at 296 million ounces as of mid-July, according to exchange data, providing a buffer against short-term supply shocks.

The next round of US-Mexico talks, scheduled for next week in Mexico City, will be the first test of whether a compromise on silver and other commodity trade flows is achievable. A failure to reach agreement could push silver prices higher on supply concerns, while a deal that preserves existing trade terms would remove a key risk premium.

This article is for informational purposes only and does not constitute investment advice.