Trump announced a tariff of up to 50% on imported copper. Is this a supply chain crisis or a new opportunity?
2025-07-10 09:30:30
On Wednesday evening local time (Thursday morning, July 10, Beijing time), US President Donald Trump officially announced on social media that he would impose a tariff of up to 50% on imported copper. Copper, as an indispensable key metal for high-tech and energy transformation industries such as smartphones, automobiles, and solar panels, its price fluctuations and supply chain changes will have a profound impact on the global economy. This article will deeply analyze the background, impact and future market trends of this policy, and give you a comprehensive understanding of the story behind the copper tariff storm.
Policy background: dual considerations of national security and trade protection
Since taking office, the Trump administration has frequently adjusted its trade policy on the grounds of national security, and the introduction of copper tariffs is a continuation of this strategy. As early as February 2025, the U.S. Department of Commerce launched an investigation based on Section 232 of the Trade Expansion Act of 1962, focusing on whether the United States' dependence on copper imports threatens national security. The results of the investigation provided a basis for Trump's tariff decision. In an interview with CNBC, Commerce Secretary Howard Lutnick made it clear that the copper tariff will take effect on August 1 or earlier, consistent with the previous increase in steel and aluminum tariffs to 50%. The announcement of this high tariff not only caught the market off guard, but also triggered sharp fluctuations in global copper prices.
Market reaction: Copper price roller coaster ride
On Tuesday, Trump mentioned the possibility of copper tariffs for the first time on the social media platform Truth Social, which triggered a strong reaction in the market. The US COMEX copper futures market responded quickly, with the price of the near-month copper contract soaring 13% that day, setting a record for the largest single-day increase in recent years. However, market sentiment did not stabilize, and the price fell back to $5.44 per pound on Wednesday. At the same time, the three-month copper price on the London Metal Exchange (LME) also fluctuated violently, reaching a high of $9,769.50 per ton and a low of $9,553.50.
On Wednesday evening local time (Thursday morning Beijing time), U.S. President Trump announced a 50% tariff on copper and said on social media that the tariff will take effect on August 1. The decision was made after a national security assessment.
During Thursday's Asian trading session, COMEX copper futures continued to rise by 2% to $5.61 per pound, indicating that the market's digestion of tariffs is still continuing.
Expert opinion: unexpected timing and scale
"Trump's decision to impose a 50% tariff on imported copper is shocking both in terms of timing and scale," Jefferies analyst Christopher LaFemina said in a report. He believes that the suddenness of this policy caught the market off guard, and the high tariffs will have a profound impact on the global copper supply chain. John Ciampaglia, CEO of Sprott Asset Management, further emphasized: "Copper's conductivity is irreplaceable, and its demand in electronics, automobiles and renewable energy continues to grow. Any supply chain disruption is likely to trigger a chain reaction."
Supply and demand imbalance: U.S. copper production is far from self-sufficient
Can the United States rely on its own copper production to get rid of its dependence on imports? The answer is no. According to the United States Geological Survey (USGS), the United States will consume 3.4 million tons of copper in 2024, nearly half of which will be imported. In contrast, domestic copper mine production in the United States is only 1.1 million tons, a year-on-year decrease of 3%, accounting for a negligible proportion of the world's 23 million tons of copper mine production. Saxo Bank analyst Ole Hansen pointed out that decades of underinvestment in copper mining and refining in the United States has put it at a disadvantage in the global copper supply chain.
Global demand surges: Copper's strategic importance underscores
According to a report by the International Energy Agency (IEA), global copper demand will reach 26.7 million tons in 2024, an increase of 7% over the past three years, and is expected to grow by another 17% by 2030. The wide application of copper in electric vehicles, wind power, solar energy and other fields makes it a core resource for energy transformation. However, the United States accounts for only a small part of global copper demand, and its domestic production capacity is far from meeting industrial demand. Experts predict that even with increased investment, it will take years to decades to build new mines and smelters, and it is almost hopeless to achieve self-sufficiency in the short term.
Smelting bottleneck: infrastructure construction has a long way to go
Currently, the United States has only two major copper smelters, operated by Freeport-McMoRan (Miami, Arizona) and Rio Tinto (outside Salt Lake City), and the mining capacity of the country's 25 copper mines is also very limited. "It may take two to three years to build a new smelter, but it will take longer to expand a mine or develop a new mine. The possibility of the United States achieving self-sufficiency in the entire copper production chain in the next decade is very small," said LaFemina of Jefferies. This means that even if high tariffs are imposed, the United States will still rely on imported copper to meet its industrial needs.
Main source countries: Role of Chile, Mexico and Canada
The United States' main sources of copper imports include Chile, Mexico and Canada, which occupy an important position in global copper ore exports. The implementation of high tariffs may push up import costs and force American companies to reassess their supply chain strategies. However, due to insufficient domestic production capacity, it is not realistic to reduce dependence on these countries in the short term. Experts predict that tariffs may cause importers to accelerate the stockpiling of copper stocks before August 1 to avoid rising costs.
Price changes: high premium in the US market
Recently, the performance of copper prices in the US market has been particularly eye-catching. As sellers expect tariffs to push up US copper prices, copper shipments have begun to shift from LME to the US market, and copper inventories at the New York Mercantile Exchange (Comex) have risen to their highest level since 2018. The US copper price was once $2,000 per ton higher than the London copper price, attracting a large influx of speculative funds. However, Ewa Manthey, an economist at ING Group, warned: "Once tariffs are officially implemented, the trend of copper pouring into the United States may reverse, US buyers will begin to consume inventories, and the market may face a new supply and demand balance."
Weak demand: Potential impact on Asia's big markets
In addition to tariffs, fluctuations in global copper demand have also added uncertainty to the market. In Asia's largest economies, the effects of government stimulus measures are waning, and copper demand in sectors such as construction is expected to slow, which could further depress global copper prices. Analysts point out that the future trend of copper prices will depend on the enforcement of U.S. tariff policies and the pace of global economic recovery.
The US decision to impose a 50% tariff on imported copper has undoubtedly dropped a bombshell on the global metal market. In the short term, the sharp fluctuations in copper prices and adjustments to the supply chain will bring challenges to companies and investors. However, in the long run, this policy may stimulate the recovery of the domestic copper industry in the United States and attract more investment into mining and smelting. At the same time, the continued growth in global copper demand has also provided new development opportunities for related companies. No matter how the market evolves, copper, as a core resource for energy transformation and technological development, will become increasingly strategically important.
1. The shock of copper tariffs: Why is the market so volatile?
Policy background: dual considerations of national security and trade protection
Since taking office, the Trump administration has frequently adjusted its trade policy on the grounds of national security, and the introduction of copper tariffs is a continuation of this strategy. As early as February 2025, the U.S. Department of Commerce launched an investigation based on Section 232 of the Trade Expansion Act of 1962, focusing on whether the United States' dependence on copper imports threatens national security. The results of the investigation provided a basis for Trump's tariff decision. In an interview with CNBC, Commerce Secretary Howard Lutnick made it clear that the copper tariff will take effect on August 1 or earlier, consistent with the previous increase in steel and aluminum tariffs to 50%. The announcement of this high tariff not only caught the market off guard, but also triggered sharp fluctuations in global copper prices.
Market reaction: Copper price roller coaster ride
On Tuesday, Trump mentioned the possibility of copper tariffs for the first time on the social media platform Truth Social, which triggered a strong reaction in the market. The US COMEX copper futures market responded quickly, with the price of the near-month copper contract soaring 13% that day, setting a record for the largest single-day increase in recent years. However, market sentiment did not stabilize, and the price fell back to $5.44 per pound on Wednesday. At the same time, the three-month copper price on the London Metal Exchange (LME) also fluctuated violently, reaching a high of $9,769.50 per ton and a low of $9,553.50.
On Wednesday evening local time (Thursday morning Beijing time), U.S. President Trump announced a 50% tariff on copper and said on social media that the tariff will take effect on August 1. The decision was made after a national security assessment.
During Thursday's Asian trading session, COMEX copper futures continued to rise by 2% to $5.61 per pound, indicating that the market's digestion of tariffs is still continuing.
Expert opinion: unexpected timing and scale
"Trump's decision to impose a 50% tariff on imported copper is shocking both in terms of timing and scale," Jefferies analyst Christopher LaFemina said in a report. He believes that the suddenness of this policy caught the market off guard, and the high tariffs will have a profound impact on the global copper supply chain. John Ciampaglia, CEO of Sprott Asset Management, further emphasized: "Copper's conductivity is irreplaceable, and its demand in electronics, automobiles and renewable energy continues to grow. Any supply chain disruption is likely to trigger a chain reaction."
2. The dream of self-sufficiency in the U.S. copper industry: out of reach?
Supply and demand imbalance: U.S. copper production is far from self-sufficient
Can the United States rely on its own copper production to get rid of its dependence on imports? The answer is no. According to the United States Geological Survey (USGS), the United States will consume 3.4 million tons of copper in 2024, nearly half of which will be imported. In contrast, domestic copper mine production in the United States is only 1.1 million tons, a year-on-year decrease of 3%, accounting for a negligible proportion of the world's 23 million tons of copper mine production. Saxo Bank analyst Ole Hansen pointed out that decades of underinvestment in copper mining and refining in the United States has put it at a disadvantage in the global copper supply chain.
Global demand surges: Copper's strategic importance underscores
According to a report by the International Energy Agency (IEA), global copper demand will reach 26.7 million tons in 2024, an increase of 7% over the past three years, and is expected to grow by another 17% by 2030. The wide application of copper in electric vehicles, wind power, solar energy and other fields makes it a core resource for energy transformation. However, the United States accounts for only a small part of global copper demand, and its domestic production capacity is far from meeting industrial demand. Experts predict that even with increased investment, it will take years to decades to build new mines and smelters, and it is almost hopeless to achieve self-sufficiency in the short term.
Smelting bottleneck: infrastructure construction has a long way to go
Currently, the United States has only two major copper smelters, operated by Freeport-McMoRan (Miami, Arizona) and Rio Tinto (outside Salt Lake City), and the mining capacity of the country's 25 copper mines is also very limited. "It may take two to three years to build a new smelter, but it will take longer to expand a mine or develop a new mine. The possibility of the United States achieving self-sufficiency in the entire copper production chain in the next decade is very small," said LaFemina of Jefferies. This means that even if high tariffs are imposed, the United States will still rely on imported copper to meet its industrial needs.
3. Where does copper come from? Reshuffle of the global supply chain
Main source countries: Role of Chile, Mexico and Canada
The United States' main sources of copper imports include Chile, Mexico and Canada, which occupy an important position in global copper ore exports. The implementation of high tariffs may push up import costs and force American companies to reassess their supply chain strategies. However, due to insufficient domestic production capacity, it is not realistic to reduce dependence on these countries in the short term. Experts predict that tariffs may cause importers to accelerate the stockpiling of copper stocks before August 1 to avoid rising costs.
Price changes: high premium in the US market
Recently, the performance of copper prices in the US market has been particularly eye-catching. As sellers expect tariffs to push up US copper prices, copper shipments have begun to shift from LME to the US market, and copper inventories at the New York Mercantile Exchange (Comex) have risen to their highest level since 2018. The US copper price was once $2,000 per ton higher than the London copper price, attracting a large influx of speculative funds. However, Ewa Manthey, an economist at ING Group, warned: "Once tariffs are officially implemented, the trend of copper pouring into the United States may reverse, US buyers will begin to consume inventories, and the market may face a new supply and demand balance."
Weak demand: Potential impact on Asia's big markets
In addition to tariffs, fluctuations in global copper demand have also added uncertainty to the market. In Asia's largest economies, the effects of government stimulus measures are waning, and copper demand in sectors such as construction is expected to slow, which could further depress global copper prices. Analysts point out that the future trend of copper prices will depend on the enforcement of U.S. tariff policies and the pace of global economic recovery.
IV. Future Outlook: Opportunities and Challenges Coexist
The US decision to impose a 50% tariff on imported copper has undoubtedly dropped a bombshell on the global metal market. In the short term, the sharp fluctuations in copper prices and adjustments to the supply chain will bring challenges to companies and investors. However, in the long run, this policy may stimulate the recovery of the domestic copper industry in the United States and attract more investment into mining and smelting. At the same time, the continued growth in global copper demand has also provided new development opportunities for related companies. No matter how the market evolves, copper, as a core resource for energy transformation and technological development, will become increasingly strategically important.
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