US copper prices are up 11% after Trump said he would be imposing a 50% tariff on copper imports. The CME contract last traded at $5.59 in a surge following the announcement.
“Today we’re doing copper,” Trump said at a Cabinet meeting before floating the 50% number.
It's not a shock as he's floated the idea of copper tariffs for some time.
It's a strategy that's tough to make sense of though. The US needs imported copper and will need much more in order to build out the needed investments in the grid, broader infrastructure and electrification. I'm not sure how making it more expensive to import raw materials needed for those factories makes the US more competitive.
There is certainly a need to incentivize the supply of mines in the US and elsewhere but a changeable tariff policy hardly achieves this. In any case, it takes many years -- often decades -- to build a copper mine so this will do nothing but drive up costs for the foreseeable future.
US officials have highlighted smelting capacity as a priority as that's now concentrated in China so we could see some action on that but I'm not sure how tariffs on imports in any way incentivize anyone to build a smelter.
In terms of trading, there is set to be a big premium on US copper relative to elsewhere. With a 50% tariff, that premium can only be captured by companies like Freeport-McMoran with sizeable US mines.
There might be second-order effects though. A tariff on US imports may signal the importance and scarcity of copper, prompting other countries to protect their supplies or secure stockpiles. It also highlights my long-held copper bullish thesis -- which is now hitting long-term highs.
Notably, this isn't just a front-month move as copper futures out to May 2026 are up more than 10%.
This article was written by Adam Button at www.forexlive.com. Read More Details
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