The stock market has largely ignored President Trump’s recent announcement regarding tariffs; however, a specific comment made on Tuesday has significantly impacted the copper market, a metal widely used across various industries, including construction, automotive, and technology.
Following Mr. Trump’s statement at the White House indicating an imminent 50 percent tariff on copper, U.S. copper futures prices reached a record high. Later that day, Commerce Secretary Howard Lutnick confirmed on CNBC that the proposed copper tariff would take effect in late July or early August.
This tariff rate exceeded many analysts' expectations, leading to a sharp increase in copper prices in New York, which outpaced those in London, a major global trading hub. This discrepancy suggests that American importers will face higher costs for copper shipments in the upcoming months. Recently, U.S. prices have diverged from global averages as American buyers have rushed to secure purchases ahead of potential tariffs.
The Trump administration initiated an inquiry into copper in February, examining whether foreign production and imports of the metal threaten U.S. economic and national security. This investigation follows similar actions that resulted in tariffs on steel, aluminum, and automobiles. Additional inquiries are ongoing for products such as pharmaceuticals, semiconductors, and lumber. The sector-specific tariffs are distinct from the broader “reciprocal” tariffs scheduled to be imposed on August 1.
Although the United States produces a significant amount of copper, it still imports around 40 percent of its consumption, primarily from Chile. Analysts at BTG Pactual noted that demand for copper generally remains stable despite market fluctuations, suggesting that producers may pass the majority of the tariff costs onto U.S. consumers. This could lead to increased prices for both consumers and producers in the U.S., potentially resulting in a negative impact on economic output.
To enhance copper supply, the Biden administration, in collaboration with the European Union, has invested nearly $1 billion in a large infrastructure project in Africa, a region rich in copper resources, where Chinese influence is considerable.
In the United States, rising copper prices have historically been linked to an uptick in crime, as scrap-metal thieves target streetlights, train yards, and plumbing systems to exploit the heightened demand for the metal.