Copper Caught in Trade War Crossfire as Tariffs Stir Volatility
StoneX’s Natalie Scott Gray analyses how looming US copper tariffs, rerouted trade flows, and weaker China growth shape price risks and supply tightness.
• Early year base metal gains reversed after President Trump’s April tariff announcement
• A 500,000 t pre tariff import surge tightens copper supply outside the US
• IMF downgrades and stalled trade talks limit upside despite bullish micro factors
Pre and-Post Tariff Price Action Volatility
Scott Gray notes that before the early April tariff storm, the LME base metal index was up 7%, making metals “the second best performing commodity asset”. After the tariff shock, those gains evaporated; the index is now down 6%, ranking just above energy. She notes that copper mirrors that swing, caught between robust early optimism of a weak dollar, China stimulus, and supply risks, and the sudden macro headwind of an escalating trade dispute.
Potential US Copper Tariffs and Supply Risk
President Trump’s 25 February directive under Section 232 of the Trade Expansion Act of 1962 launched a 270-day investigation into copper imports. Scott-Gray stresses the unknowns: “We don’t know if there’s going to be country exemptions, and we’re not sure what level these tariffs are going to come in”. Market expectations vary between 10% and 25%, pushing copper price volatility to its highest since 2022.
Trade Re Routing Tightens Global Availability
With the US importing 45% of its copper needs, domestic premiums have spiked, attracting metal from Chile, Canada and even exchange warehouses. Around 500,000 t is now heading stateside, creating scarcity elsewhere during China’s peak demand season. Scott Gray observes that US scrap flows to China halved in March and “scrap levels [may] almost fall to zero”. Lower Shanghai exchange stocks underpin the tightness theme.
Balanced Fundamentals vs Macro Headwinds
Scott-Gray forecasts a broadly balanced global market this year and next, with mine output rising and demand moderate. Yet timing matters. The longer the US delays tariffs, the more support copper gets from import-driven tightness. Still, in Scott-Gray’s opinion, Doctor Copper ultimately diagnoses the world economy. “While the tensions between China and the US remain elevated, we find it very difficult to see copper hitting a new nominal high”.
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