Copper Extends Losses as Trump's Tariff Threat Looms

Copper prices extended their losses on Monday, as investors reacted to US President Donald Trump's threat to impose tariffs on metals, including copper. The metal, which is widely used in construction and manufacturing, has been volatile in recent months, with prices fluctuating due to a variety of factors, including Chinese demand and fund positioning.



The copper price has seen considerable fluctuation, dropping from a peak of $5.25 per pound to as low as $3.92 per pound before rebounding to around $4.25 per pound. This volatility can be attributed to several factors, including Chinese demand fluctuations, fund positioning, and shifting global economic sentiment.



Trump's proposed tariffs on copper and other metals are expected to have significant impacts on the global copper market in both the short and long term. According to the "Fundamental Analysis of COPPER" report, the market expects Trump to impose high import tariffs on copper and silver, which could move copper prices further away from market fundamentals and cloud the 2025 outlook on demand for the crucial industrial metal. Analysts from S&P Global Commodity Insights warn that the planned tariffs from US President-elect Donald Trump could move copper prices further from market fundamentals and cloud the 2025 outlook on demand for the crucial industrial metal. The tariffs could also slow global economic growth, which would negatively impact copper demand.

In the short term, the tariffs could lead to increased prices for copper and other metals, as well as supply chain disruptions. In the long term, the tariffs could lead to a decrease in global copper demand, as well as a shift in production and trade patterns.

The Chinese government might respond to Trump's tariffs in several ways, which could have significant implications for the global copper market. Here are a few possibilities:

1. Counter-tariffs: China could impose counter-tariffs on US imports, including copper, to retaliate against Trump's tariffs. This could disrupt the flow of copper between the two countries and potentially lead to a decrease in global copper supply, as China is a major consumer and importer of the metal.
2. Stimulus package: To mitigate the impact of tariffs on its economy, China might introduce a stimulus package, which could include increased spending on infrastructure projects. This could boost domestic demand for copper, potentially offsetting the impact of reduced imports from the US.
3. Increased imports from other countries: China might diversify its copper imports by sourcing more copper from other countries, such as Chile, Peru, or Australia. This could lead to increased competition among copper producers and potentially drive down global copper prices.
4. Stockpiling: China could also choose to stockpile copper in anticipation of future supply disruptions or to take advantage of lower prices. This could lead to a decrease in global copper demand in the short term, but it could also create a supply deficit in the future if China decides to release its stockpiles.

In conclusion, Trump's planned tariffs on copper and other metals could have significant impacts on the global copper market, affecting supply, demand, and prices. The Chinese government's response to these tariffs could also have a significant impact on the global copper market. Investors should closely monitor the situation and adapt their strategies accordingly to mitigate potential risks and capitalize on opportunities.