Posted on 10 Jul 2025
US President Donald Trump announced his administration is planning to implement a 50% tariff on copper imports, following an investigation started in February.
“Today we’re doing copper. I believe the tariff on copper, we’re going to make it 50%,” Trump said in a televised cabinet meeting on Tuesday.
Later, commerce secretary Howard Lutnick said in a CNBC interview that he expected the tariffs to be put in place as soon as the end of this month or early August.
Although tariffs had been expected and were already driving up copper prices in the US market, both the timing and magnitude of the rather informal announcement came as a surprise to market participants. That’s because the White House had until mid-November to conclude its investigation on copper tariffs under Section 232; and like previous sectoral tariffs enforced on the grounds of national security concerns, the market also widely expected a 25% rate, Kallanish notes.
Following the announcement, copper prices trading on the New York-based Comex exchange closed at an unprecedented 25% premium over futures on the London Metal Exchange (LME). On Tuesday, Comex prices surged over 13% to $5.69/pound, pushing the LME spread to over $1,200/tonne. According to Daniel Hynes, senior commodity strategist at ANZ Research, this is an all-time record high.
“Even though the prospect of a tariff has already seen an increasing amount of copper flow into the US warehouses, this announcement is likely to see that increase even further as consumers try to front run the implementation,” he adds.
“We think a 50% tariff would be unlikely to sustain, with exemptions possibly emerging during the conclusion of reciprocal tariff negotiations,” comments Marcus Garvey, Macquarie’s head of commodities strategy. At this rate, he sees tariffs having a destructive effect on demand, already at times of excess inventory in the US. As a result, Macquarie does not expect the full tariff to be priced in the copper market.
Meanwhile, analysts at Jefferies see higher copper prices in the US incentivising growth investment in mines and new smelters/refineries. “We believe the longer-term aim of the Trump administration may be for the US to be fully self-sufficient in copper, but mines take too long to develop for this to be achieved in less than a 10-year time horizon… It is therefore possible that tariffs on refined copper imports will persist for a relatively long duration, which is what we have seen in the US steel industry following the roll-out of section 232 tariffs for steel by President Trump in 2018,” they add.
According to the US Geological Survey, copper production declined at a majority of US copper mines, driving its 2024 domestic output down by 3% year-on-year to 1.1 million t. Imports of refined copper, meanwhile, increased 5% to 810,000 t, led by volumes from Chile (65%), Canada (17%), Mexico (9%) and Peru (6%).
Codelco, the world’s largest copper producer, is adopting a “wait-and-see” approach, pointing out that it’s too early to comment on the matter without official guidance and details. “We have to see whether this will apply to all countries or only some. We’ve always known that exceptions are made, and therefore, I think it’s premature to comment,” its chairman Maximo Pacheco told Reuters.
On Wednesday morning, the LME 3-month copper price was trading down around 2% at $9,642/t, reflecting fears that the tariffs could dent global demand – a concern voiced by Tania Constable, ceo of the Minerals Council of Australia.
“While Australia’s direct copper exports to the United States are limited, trade restrictions imposed on other key trading partners have the potential of disrupting global supply chains, increasing costs, and creating uncertainty for Australian exporters,” she concludes.
Source:Kallanish
