The global copper market experienced an unprecedented shock on Wednesday as President Donald Trump’s administration made a surprising decision to exclude refined copper from a sweeping 50% import tariff. This unexpected policy shift abruptly halted a months-long rally in copper prices, a rally largely fueled by widespread fears of broad trade restrictions.
The White House confirmed that the new tariffs, set to be effective from August 1, would specifically target only semi-finished copper products. This includes items such as pipes, wires, rods, sheets, and tubes, alongside copper-intensive goods like pipe fittings, cables, and various electrical components. Crucially, the proclamation meticulously differentiated between product types, explicitly excluding input materials such as ores, concentrates, mattes, cathodes, and anodes from the tariff list. Furthermore, provisions under the Defense Production Act were introduced, aimed at bolstering domestic refining and smelting capacity.
Following the announcement, COMEX copper futures plummeted to a low of $4.50 per pound, marking the largest single-day decline in years for this vital commodity. This sharp drop effectively erased the premium that domestic copper had painstakingly built over global prices. The once-soaring premium between COMEX and the London Metal Exchange, which had previously reached over $3,000 per metric ton, collapsed to a mere $104 in the wake of the news, signifying a rapid market repricing.
Market analysts quickly reacted to what they described as “Trump’s epic backflip” on his own import tariff policy. One analyst noted that markets were now intensely focused on repricing refined copper significantly lower, speculating that someone must have finally convinced the President that the U.S. economy simply could not withstand the economic impact of such a broad trade hit, especially on this essential metal.
Earlier in the year, U.S. copper prices had surged dramatically as the administration teased the prospect of tariffs that many presumed would encompass all forms of copper. This anticipation ignited a wave of arbitrage trades and a substantial increase in refined metal imports. The speculative fervor intensified when Trump later declared a tariff rate of 50%, double what most market participants had initially expected, pushing futures as high as $5.9585 per pound.
As the dust settled on this significant policy reversal, leading copper firms felt the immediate economic impact. Freeport-McMoRan, a major player in the mining sector, closed 9.46% lower at $39.14, while Southern Copper Corporation shed 6.33%, settling at $90.54 per share. These declines underscore the swift and severe reaction of stock markets to the sudden shift in trade policy affecting commodity prices.
The United States, having stockpiled considerable amounts of copper in the first half of the year in anticipation of broad tariffs, could now potentially re-export this surplus. Such a move might cause short-term supply chain disruptions and further re-pricing within the global copper market. This dynamic adds another layer of complexity to the already volatile market.
Despite the recent clarity on U.S. trade policy, the market is not entirely free from future uncertainties regarding 2025 price discovery. A critical upcoming event is the Chilean presidential election on November 16. Candidates in this election are offering sharply divergent paths for the future of CODELCO, the world’s leading copper producer, which could significantly influence long-term metal futures and the stability of global copper supply.
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