Copper Market in Turmoil as Trump Touts 50% Tariff on US Imports

Mike McGlone, Senior Commodity Strategist at Bloomberg Intelligence, breaks down the impact of President Trump's 50% copper tariffs.

President Donald Trump sowed fresh chaos in metals markets by indicating the US would implement a higher-than-expected 50% tariff on copper imports, spurring a record spike in New York futures and a drop in the global benchmark.

The plan, announced in an apparently off-the-cuff comment to reporters, marks the latest twist in a tumultuous period for industrial commodities, as the US leader aims to encourage more mining and smelting at home. He’s already raised fees on steel and aluminum imports, while probes into flows of multiple other metals are in train.

Since February, when Trump first laid out plans for the levies, global traders have sent record volumes of the metal to the US, targeting huge profits on cargoes that can be delivered before the tariffs land.

A 50% tariff — which could be in place within weeks — signals an imminent end to that trade but injects new uncertainties, including on timing and potential carve-outs for some large producers. In the short-term, one crucial question for traders is whether or not copper that’s already on its way to the US will be hit with tariffs when it arrives.

Citigroup Inc. called it a watershed moment for copper, closing the window for significant shipments into the US market.

“The degree of impact will heavily depend on the details,” said Marcus Garvey, Macquarie Group’s head of commodities strategy. “Not only the rate of any tariff but which forms of copper it is applied to, and whether or not there is any grace period ahead of its implementation.”

If the tariff takes hold, it will inflict higher costs across a broad section of the US economy due to the myriad of industries and applications that rely on copper — even as Trump piles pressure on the Federal Reserve to lower interest rates.

Trump’s already imposed 50% levies on steel and aluminum, but there’s particular concern about the economic impact of copper tariffs because the US is highly reliant on imports. US buyers have already warned that the measure risks undermining Trump’s core ambitions to revive manufacturing and challenge China’s industrial might.

“The US does not have nearly enough mine/smelter/refinery capacity to be self-sufficient in copper,” Jefferies LLC analysts including Christopher LaFemina wrote in a note. “As a result, import tariffs are likely to lead to continued significant price premiums in the US relative to other regions.”

Contracts on the Comex surged to an unprecedented 25% premium over London Metal Exchange prices — the global benchmark — in the aftermath of Trump’s comments, a level that also suggests the market is not fully convinced that a 50% levy will be imposed universally. A single carve-out for a top supplier like Chile would materially dampen the blow for importers, and manufacturers now have huge buffer stocks to fall back on thanks to the record-breaking imports seen over recent months.

Spot copper contracts on the LME tumbled below futures in the wake of Trump’s announcement. Copper for immediate delivery had been trading at huge premium in late June, as traders rushed to ship metal to the US to capture premium prices. Given that tariffs may fall into place in a matter of weeks, that arbitrage trade now looks risky, easing demand for copper stocks in Europe and Asia.

Copper climbed as much as 17% in New York on Tuesday, a record one-day spike to an all-time high, before falling more than 4% in early trading on Wednesday. On the LME, the metal slid as much as 2.4% at the open, before easing to change hands at $9,621.00 a ton, 1.7% lower at 13:44 p.m. local time.

“The tariff increase is a bearish factor for LME copper prices in the near term,” said Yongcheng Zhao, principal analyst of the China copper market at Benchmark Mineral Intelligence. “We expect continued volatility until the tariff officially kicks in, followed by the potential for a sharp decline.”

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