US copper prices surge to record as Trump calls for 50% tariff, hitting factory costs

TORONTO – Copper futures in New York surged after US President Donald Trump said he planned to implement a 50 per cent tariff on imports of the commodity, a move that is likely to spark massive supply-chain ripples through global metal markets.

Contracts on the Comex climbed as much as 17 per cent on July 8, a record one-day spike. The New York price touched an all-time high of US$5.8955 a pound, before settling at US$5.6855.

Mr Trump’s tariff threats have already begun to inflict higher costs across a broad section of the US economy due to the myriad of industries and applications that rely on copper. The metal is used in everything from consumer electronics and automobiles to home construction and data centres.

For months, the price of copper in New York has been ratcheting higher as buyers have raced to stock up before the levies are imposed. In the process, input costs for American manufacturers have surged above prices that their rivals pay in the rest of the world.

The disconnect reached unprecedented levels on July 8 as Comex futures spiked to trade at a 25 per cent premium to the global benchmark set in London.

The result is dislocations in the market given the significant US premiums. Traders have been shipping record volumes of copper to the United States in recent months to front-run any possible implementation of tariffs, and the fresh spike in Comex prices will create an added incentive to move any final shipments of metal there quickly before the levies are introduced. 

“In the short term, the price is going to rise significantly because the market was” expecting a lower tariff rate, said Mr Juan Carlos Guajardo, founder of consultancy Plusmining. “So, there will be a lot of buying before the tariff goes into effect.”

Mr Trump’s directive comes as the US and the rest of the world expect a dramatic surge over the coming decade in demand for the industrial metal, with data centres, automakers, power companies and others scouring the globe for feedstock to increase electric-vehicle output and electric grid capacity. Retooling power and transportation systems to run on renewable energy will require far more copper than the companies that produce it are currently committed to deliver.

A 50 per cent tariff on copper would match duties Mr Trump has already imposed on steel and aluminium in a bid to revive US production, but it would take a particularly heavy toll on American factories, which rely on overseas suppliers for nearly half of the copper they buy.

US copper buyers have already sounded the alarm about the long-term threat that the levies pose, arguing that they risk undermining Mr Trump’s core ambitions to revive manufacturing and challenge China’s industrial might.

“Any restrictions on US imports of copper cathode would merely redirect copper supply to China,” a representative for top US copper importer Southwire Company said in April.

“At the same time, US copper producers would face significant shortages of supply, particularly in the short- and medium-term, as US copper production cannot increase fast enough to fill the supply gap.”

Those warnings appear to have gone unheeded, with Commerce Secretary Howard Lutnick telling CNBC on July 8 that the department concluded its investigation, and it is now up to Mr Trump to decide what levy to charge.

One consolation for manufacturers is that, for now, there is plenty of copper on US shores for them to buy – even if it does carry an eye-watering price tag. Traders have been shipping record volumes of copper to America to take advantage of the spike in prices, and there is now more copper stored in Comex warehouses than there is in the combined depots overseen by the London Metal Exchange and the Shanghai Futures Exchange.

Morgan Stanley analysts said Mr Trump’s latest move will support higher Comex copper prices, since they will reflect the cost of bringing metal into the US, though a build up in domestic inventories should soften the impact in the short term. 

There are still a lot of outstanding questions for the market, including the exact timeline for the potential tariffs. The industry is also awaiting further details on the types of copper shipments that would be impacted and whether there will be any exemptions. 

Mining officials in Chile, by far the biggest shipper of copper into the US, are among those waiting for details.

Chile – and particularly state-owned Codelco – would be the most affected producer given the country accounts for about 500,000 tonnes of the total of 700,000 tonnes of refined metal that the US imports a year. Of that, Codelco alone ships about 350,000 tonnes.

Asked about the 50 per cent remarks, Chile’s Foreign Ministry pointed out that there is still no executive order regarding a Commerce Department investigation into copper tariffs, and that Chile has yet to receive notification of any decision. Similarly, Codelco chairman Maximo Pacheco said it is too soon to draw conclusions. 

Still, Comex prices are likely to cool after the US tariffs kick in and the frenzy to ship the metal to American shores subsides.

The US consumed about 1.6 million tonnes of refined copper in 2024, according to the US Geological Survey. While the US has significant mines, producing some 850,000 tonnes of primary copper in 2024, it still relies on imports from key trade allies to fill the need. Chile is the largest import source, accounting for 38 per cent of total import volumes, followed by Canada at 28 per cent and Mexico, with 8 per cent share. Net copper imports account for 36 per cent of demand, according to Morgan Stanley research. BLOOMBERG