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Copper prices fell heavily on Wednesday due to US President Trump’s decision to impose 50% tariffs on copper imports, causing volatile price swings and major trade disruption.
The announcement came as the clock ticked down toward the August 1st deadline for higher US tariff rates, as Trump presses on with his bid to reshape global trade.
Tariff Announcement Triggers Chaos
President Trump announced 50% tariffs on specific types of copper imports such as pipes, wires and fittings, which will be set in motion on August 1st.
Refined copper materials were exempted, which caused US copper futures to decline by 23% in a single day, and marked the largest decline since 1968, alongside the 12% fall during the 1987 Black Monday crash. ⁽¹⁾
The decision to exempt refined copper could heavily impact global trade of the metal, which plays a crucial role in the world economy thanks to its widespread use in electrical wiring.
Copper Rush and Market Volatility
Earlier in July, US copper prices surged to records and well above global prices this month after Trump said he would impose a 50% import tax on the metal, which is used in electronics, automobiles and in construction. ⁽²⁾
Commodity traders and businesses raced to bring copper across the border ahead of the tariff and filled metals warehouses in Baltimore, New Orleans, Detroit and other storage hubs. ⁽³⁾
After the exemption of refined copper products, Copper futures in COMEX (US Commodity Exchange) fell more than the LME (London Metals Exchange) one. Copper futures on COMEX fell 23% to around $4.4 per pound, as copper futures on LME declined only 2.22% to around $9,570 per metric ton. ⁽⁴⁾
Impact on Global Trade and US Industry
Copper is an important commodity, as it is widely used in common products such as electricity and construction. As the US contains large inventories of imported copper, speculation shows that they could be re-exported from the US. This could make the US a hub for redirecting copper exports to other regions. ⁽⁵⁾
The tariffs on copper, alongside other commodities such as steel and aluminum, aim to protect US manufacturing, especially in electronics, plumbing fittings and other similar products. However, it could provide slight support to US miners as refined copper remained exempted from tariffs. Industry experts warn that the US lacks the capacity to replace all copper imports quickly, which could be challenging for Trump’s plan to boost US metals production. ⁽⁶⁾
Trump’s Unpredictable Trade Policy
President Trump has been unpredictable in his trade policies, which have caused volatility in financial markets. Copper’s price volatility indicates his aggressive and unpredictable approach, with the tariff announcement coming up soon before imposing it.
The president’s initial threat of a 50% tariff made at a press conference excited miners and fueled optimism that the administration would make it easier to build new mines and smelters. Yet others saw risk in bidding up copper prices based on the president’s statements.
