Global Copper Market Faces Major Disruption Amid US Tariffs

The global copper market is experiencing a big disruption in a year already marked by price volatility, shifting policies, and trade uncertainties. President Donald Trump recently imposed a 50% tariff on copper imports but excluded refined copper, the core component of international copper trade. This exemption triggered a sharp decline in US copper prices, abruptly ending a lucrative window for traders who had expedited shipments into the US ahead of the tariffs.

Comex copper futures in New York plunged 22% as market participants recalibrated US pricing relative to global benchmarks. Meanwhile, prices on the London Metal Exchange (LME) declined only marginally, causing Comex front-month contracts to flip from a 30% premium to a discount versus the LME benchmark.

Excluding refined copper from the tariffs is expected to disrupt global trade flows of this metal, which underpins electrical infrastructure worldwide. Large inventories have accumulated in US warehouses, fueling speculation about potential re-exports.

When President Trump first signaled possible tariffs earlier this year, US copper prices surged and traders accelerated shipments to US ports. The July announcement of a 50% tariff, higher than initially anticipated, intensified the rush, with at least one shipment reportedly destined for Hawaii before month-end.

“This outcome sharply diverged from market expectations,” says Li Xuezhi, Head of Research, Chaos Ternary Futures. He says that those betting on sustained elevated US prices “wasted their efforts” and expects global copper flows to return to normal.

The exception is not expected to materially affect market fundamentals or prompt widespread re-exports, say Goldman Sachs analysts. They forecast Comex prices will closely track LME levels going forward. On the LME, copper settled 0.9% lower at US$9,611/t, while Comex copper closed down 22% at US$4.371 per pound.