Donald Trump’s vow to impose 50 per cent tariffs on copper imports left the market for the world’s most important industrial metal reeling on Wednesday.
“Today we’re doing copper,” Trump said before a cabinet meeting on Tuesday, adding he believed the tariffs would be 50 per cent.
Although US prices for the red metal spiked after his comments, the global price for copper on the London Metal Exchange sank on Wednesday, on expectations that tariffs would ultimately reduce demand for the metal.
“Eventually physical demand growth for copper worldwide will come under pressure, as downstream players seek to defer consumption,” said commodities analyst Tom Price at Panmure Liberum. He added that the copper tariffs are likely to have an inflationary effect for American consumers.
The US imports about 60 per cent of its copper, with the rest met by domestic mines or recycled scrap.
Since the start of the year, the spectre of higher tariffs set off a rush to lock in supplies of copper, which is widely used in electronics, construction and industrial equipment. US stocks of the metal on Comex have reached record highs this month.
After Trump’s announcement, prices for the metal surged 13 per cent to a record high of $5.69 per pound ($12,547 per tonne).
Copper prices traded on New York’s Comex exchange are now roughly 25 per cent higher than those on the London Metal Exchange.
“The reaction in the copper market to Mr Trump’s announcement was fast and furious,” said Ed Meir, a consultant to Marex, a commodities broker, adding that a 50 per cent tariff would be a “massive hit” for US consumers. “Any notion of sleepy market conditions setting in over the summer months is out the window.”
Howard Lutnick, commerce secretary, said in a CNBC interview that he expected the duties to be put into place as soon as the end of this month.
Traders said that the rush to get copper into the US would likely slow down now, with shipments due to arrive after August 1 likely to get rerouted to avoid the tariff hit.
Trump’s latest tariff salvo on Tuesday came as he also threatened duties of 200 per cent on drug imports. In a pivotal week for Trump’s trade war, the White House is also expected make trade announcements related to several more countries later on Wednesday.
