On July 8, 2025, the US government officially announced a 50% tariff on imported copper, triggering a violent shock in the global copper market. On that day, the US copper futures price soared 13% to close at $5.6450 per pound, setting a record high closing price. This is the largest single-day increase since 1968, and the copper price has risen 38% since the beginning of the year. This surge reflects the market's dual concerns about the tight domestic copper supply in the United States and the sharp increase in import costs.



Market expectations have already shown signs. Before the official tariffs were implemented, companies had already begun to stockpile goods in large quantities to hedge against policy risks. Morgan Stanley pointed out that US buyers' sea freight purchases increased significantly in the early stage, and some manufacturers even chose to prepay inventory in advance. The rapid increase in the cancellation rate of copper warehouse receipts at the London Metal Exchange also showed that spot buying has significantly increased, and the market has quickly shifted from trading to physical delivery, highlighting liquidity pressure in the short term.

Trade protectionism is intensified, copper is included in the national security list

This round of tariff adjustments still cites Section 232 of the Trade Expansion Act. The Trump administration officially lists copper as a national strategic metal, along with steel and aluminum. At a cabinet meeting, Trump made it clear that copper is indispensable to the United States' "economic security and national defense foundation" and that it must reduce its dependence on foreign metals.

The tariff is higher than the market generally expected. Although the government has previously released signals, the heavy tax of 50% still caught many companies off guard. According to data from the United States Geological Survey, the United States will import a total of 810,000 tons of refined copper in 2024, accounting for nearly half of the total consumption, mainly from Chile and Canada, with a total value of copper imports reaching US$17 billion for the whole year. With such a high proportion of reliance on imports, this tax may completely rewrite the cost structure of the US copper supply chain, and companies generally face profit compression and adjustment cycles.

The risk of inflation rebounding under the impact of tariffs

Copper has a wide range of industrial applications and is a core raw material for industries such as residential construction, consumer electronics, electric vehicles, renewable energy and the military industry. Rising tariffs will inevitably push up product manufacturing costs, which will eventually be passed on to consumers. Several industry associations have issued warnings: From home appliances to smart grid systems, terminal price increases are almost certain.

At the macro level, analysts pointed out that the surge in copper prices may increase inflationary pressure and disrupt the original monetary policy rhythm. The Federal Reserve is currently in a wait-and-see window, evaluating whether to start the process of interest rate cuts in the second half of the year. However, if copper prices continue to run at a high level, coupled with supply chain bottlenecks and labor shortages, it may trigger a new round of cost-push inflation. This situation will force the Fed to postpone the path of easing and even reconsider the possibility of raising interest rates.

Long-term supply-demand imbalance poses structural risks

Copper is regarded as a "key metal" for electrification and digital transformation, and its strategic position is rising. The International Copper Study Group (ICSG) predicts that global refined copper demand will grow by 2.4% in 2025, which is slightly lower than previously expected, but still shows strong resilience. With the rapid expansion of emerging fields such as AI infrastructure, electric vehicles, and data centers, the medium- and long-term demand for copper has continued to rise.

The supply side has shown obvious bottlenecks. Although global production is expected to grow by 2.9% in 2025, mainly from capacity expansion projects in emerging markets, it will shrink by 1.5% in 2026. According to Glencore's estimates, to meet the needs of global green transformation in 2050, annual copper production needs to increase by 1 million tons per year, which is equivalent to building one of the world's largest copper mines, "Escondida", every year. However, the average cycle from discovery to production of U.S. mineral projects is as long as 30 years, and it is difficult to alleviate the supply gap in the short term.

The path to copper financialization is becoming clearer

Analysts believe that due to the combined effects of policy promotion, supply and demand imbalance, and rising awareness of resource security, copper is gradually breaking away from the single pricing logic of traditional industrial products and evolving into a strategic resource with financial attributes; trade protectionism is gradually changing the flow path of global copper, making the pricing mechanism more uncertain.

From a structural perspective, although there may be a technical correction in the short term, the medium- and long-term support for copper remains solid. Analysts believe that the trend of copper prices has been embedded in the multiple logic of energy transformation, technological upgrading and national security game, and is an important indicator of the reshaping of the global industrial and financial structure.