Natalie Scott-Gray, Senior Metals Analyst at StoneX, assesses the impact of President Trump’s copper tariff announcement on global markets.
The announcement by President Trump regarding higher-than-expected copper tariffs under Section 232 has triggered volatility across copper markets. Although the investigation’s outcome is not yet final, comments suggest tariffs could be 50% higher than previously anticipated and implemented sooner than expected.
COMEX copper posted a record one-day spike, while LME benchmark prices fell nearly 2%. “U.S. copper prices posted a record one-day spike on Tuesday, pushing COMEX copper to an all-time high” notes Scott-Gray. The arbitrage between COMEX and LME jumped to more than $2,600 per tonne but still may not fully reflect a 50% tariff.
The market continues to grapple with four major uncertainties: timing of implementation, tariff size, exemptions for producers like Chile and Canada, and whether the investigation will extend to scrap exports. Scott-Gray adds that “the quicker that a tariff ruling is made… the quicker we can see a return to normal trade patterns”.
If the US enforces steep tariffs without exemptions, LME prices could face long-term bearish pressure while US prices remain elevated. “This in our view, spells out a long-term bearish outlook for LME copper prices”. The structural tightness outside the US may take time to unwind, especially if the investigation extends beyond early August.
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--- Written by Gus Farrow
--- Expert: Natalie Scott-Gray, StoneX Senior Metals Analyst
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