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(Bloomberg) -- Surging lease rates for silver are once again upending the precious metals market, with traders fearing that possible US tariffs could squeeze already tight supplies in London as price dislocations re-emerge between key trading hubs.

Washington last month categorized silver as critical to US national security, fueling worries that its new status may draw the attention of President Donald Trump, who ordered an investigation into critical minerals in April. That’s sent futures in New York above the international benchmark as traders price in the risk of silver getting hit with tariffs, and holders scramble to ship the white metal into the US to capture premiums.“The US market’s concern is that the metal might be subject to tariffs,” Bernard Dahdah, an analyst at Natixis, said in an emailed note. “This demand for physical is in turn reducing the pool of available leasable material in London and as such lifting silver’s lease rate.”

Physical supplies of silver were already looking tight, with European refiners focused on recasting gold bars in recent weeks due to confusion over Trump’s tariffs. Meanwhile, inventories in London have dwindled as investors pile into exchange-traded funds backed by gold and silver, which have clocked year-to-date gains of more than 35% and 40% respectively.

That scarcity is already filtering through to the market. Silver futures on Comex are trading at an elevated premium of about 70 cents above London’s benchmark spot price, and the cost of borrowing silver in the UK capital on a short-term basis has spiked above 5% for the fifth time this year — well above historical levels of near-zero.

Prices in one year have gone lower than today’s price — a rare event reflecting stronger demand for metal that’s immediately available. That could be because dealers are looking to move metal to the US before possible levies are imposed.

It was price ructions like these that helped traders at top banks including JPMorgan Chase & Co. and Morgan Stanley mint money earlier this year, when Trump’s sweeping tariff agenda roiled global financial and commodity markets. The unusually large spread between London and New York pulled huge volumes of bullion into the US as traders chased premiums, though that trade quickly collapsed in April after precious metals were exempted from duties.

So far in September, there have been larger-than-normal deliveries planned against Comex futures expiring this month, mostly on behalf of bullion banks’ clients, according to exchange data from CME. The data does not indicate whether the deliveries are being used to profit from the higher price differentials, or simply to exit existing short positions. Inventories at Comex warehouses have also expanded slightly over the last month, with volumes for silver now sitting at the highest levels in records going back to 1992.

But doubts linger over Trump’s tariffs, and “it is incredibly difficult to trade in that uncertainty,” said David Wilson, senior commodities strategist at BNP Paribas SA.

“If you look at US ETF holdings, they’ve absolutely exploded. So there’s been ongoing demand,” he said. “It wasn’t a one-off” when traders shipped huge quantities of bullion to New York earlier in the year to capture US premiums. With more investors beginning to buy into the idea that both gold and silver can continue to rally, “it’s possible we won’t get those liquidations,” he added.

--With assistance from Mark Burton and Jack Farchy.