Copper prices plunged nearly 20% on Wednesday after President Donald Trump surprised markets by excluding refined copper from a sweeping 50% import tariff, abruptly ending a months-long rally fueled by fears of broad trade restrictions.
The White House confirmed the new tariffs, effective August 1, will apply only to semi-finished copper products such as pipes, wires, rods, sheets, and tubes, as well as copper-intensive goods like pipe fittings, cables, and electrical components.
Yet, the proclamation was careful to distinguish between product types, as Input materials, including ores, concentrates, mattes, cathodes, and anodes, were explicitly excluded from the tariff list. The proclamation also introduced provisions under the Defense Production Act to boost domestic refining and smelting capacity.
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COMEX copper futures reached as low as $4.50 per pound, the largest single-day decline in years. The drop erased the premium that domestic copper had built over global prices. The once-soaring premium between COMEX and the London Metal Exchange, which had reached over $3,000 per metric ton, fell to $104 following the news.
“Markets are now busily repricing refined copper much lower after Trump’s epic backflip on his own import tariff policy,” Panmure Liberum analyst Tom Price said for Reuters.
“Someone must have finally got through to (Trump) that the U.S. economy simply can’t afford this new trade-hit,” he added.
Earlier this year, U.S. copper prices surged as the administration teased tariffs that were presumed to include all forms of copper, causing a spike in arbitrage trades and large volumes of refined metal imports. That surge intensified when Trump unexpectedly announced the tariff rate would be 50%, double what most market participants had anticipated, with futures ticking as high as $5.9585 per pound.
After the dust has settled, leading copper firms have dropped in value. Freeport-McMoRan (NYSE:FCX) closed 9.46% lower at $39.14, while Southern Copper (NYSE:SCCO) shed 6.33%, to $90.54 per share.
During Wednesday’s earnings presentation, Southern Copper’s CFO Raul Jacob noted the firm believes “an intense commercial war between the U.S. and China will affect economic growth worldwide.” Still, he clarified about “maintaining a positive long-term outlook for copper.”
The U.S., which had stockpiled copper in the first half of the year, could now re-export it, causing short-term supply chain disruptions and further re-pricing.
However, the market is not yet in the clear when it comes to 2025 price discovery. On November 16, Chileans will vote for a new president, with candidates offering divergent paths for the future of CODELCO, the leading global copper producer.
Right-wing contenders Evelyn Matthei and José Antonio Kast advocate partial privatization and operational reforms. At the same time, Jeannette Jara, from the far left, supports greater public control and opposes joint ventures with private firms.
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