Copper Tariff Buy Sell Nonferrous

Trump’s 50% Copper Tariff: What It Means

What Happened

* President Trump plans to impose a 50% tariff on copper imports, aiming to stimulate domestic production of this critical industrial metal.

* The announcement was unexpectedly early and at twice the anticipated rate (market expected 20–25%).

* Tariffs are likely to be implemented by end of July or August 1, per Commerce Secretary Howard Lutnick.

Market Impact: Price Shock and Strategic Hoarding

Copper Prices Soar

* US Comex copper futures surged over 12% (after rising 17% the previous day).

* Prices hit record highs on panic buying ahead of tariff implementation.

Arbitrage Surge

The Comex–LME arbitrage gap widened to over $2,000/tonne, spurring more copper inflows to the US—front-running the tariff.

Volatility Expected

* Analysts (e.g., RBC Capital Markets) foresee short-term volatility, especially in copper equities.

* Shares of Freeport-McMoRan, the largest US producer, rose >5% on optimism.

Global Reaction: Trade Tensions Brewing

Trade Frictions Emerge

* Chile, Canada, Mexico, Peru (top copper suppliers to the US) are pushing back, claiming US imports don’t threaten national security.

* These nations have free trade agreements with the US, which could complicate tariff legality under WTO and USMCA rules.

Industry Pushback

* National Mining Association and other industry bodies have not publicly supported the move, citing uncertainty.

* Pierre Gratton (Mining Association of Canada): Tariff could impact Canadian smelters like Glencore’s Horne facility.

* Codelco (Chile) is awaiting clarification on which products are affected.

US Industrial Base: Benefits and Bottlenecks

Domestic Producers Win — For Now

US companies like Freeport-McMoRan stand to gain from higher prices and reduced foreign competition.

But There’s a Catch

* The US only has 3 operational copper smelters.

* Major copper projects like Resolution Copper (AZ) and Pebble Mine (AK) have faced strong environmental opposition and regulatory delays.

Sector-Wide Impact

* Copper is essential in EVs, renewable energy, power grids, defense, and electronics.

* The tariff could raise costs for US manufacturers in these sectors.

Inventory & Demand Risks

US Copper Stockpiles Swell

* The US has already front-loaded imports in 2024, with 6 months covering a full year’s demand.

* Analysts (e.g., Ole Hansen, Saxo Bank) expect a price correction as domestic buyers work through stockpiles post-tariff.

Outlook: Short-Term Rally, Medium-Term Risks

Timeline & Market Dynamics

• Now → July : End Prices likely stay elevated as buyers rush to import ahead of tariffs
• Post-August: Tariff kicks in → imports collapse, demand may slow due to higher costs
• Late 2025–2026: US producers may scale up output if regulatory barriers ease but likely too slow to meet full demand
• Global Market: Bearish for LME copper as oversupply grows outside US; arb trade may normalize

Source: India Today