Why FTSE 100 Mining Stocks Are the Ultimate Hedge Against Global Trade Wars

The world is in the grip of a new era of trade tensions, with tariff threats and retaliatory measures reshaping global supply chains. Yet amid this chaos, one sector is thriving: mining stocks in the FTSE 100. Companies like Anglo American (LON:AAL) and Rio Tinto (LON:RIO) are emerging as prime beneficiaries of commodity price surges fueled by protectionist policies. This article argues that FTSE 100 mining stocks are a tactical must-have for investors seeking inflation hedges and geopolitical buffers, with the "TACO trade" sentiment amplifying their appeal.

The Copper Tsunami: Tariffs Drive Price Volatility—and Profits

The U.S. decision to impose a 50% tariff on copper imports in mid-2025 has sent shockwaves through global markets. As of July 2025, U.S. copper prices hit record highs, with the COMEX-LME premium soaring to $2,600/tonne—a staggering 138% jump from pre-tariff levels. The disruption isn't just theoretical: households and businesses now face $15,000/tonne copper costs in the U.S., versus $10,000 globally.

For FTSE 100 miners, this is pure profit fuel. Anglo American, a global copper giant, saw its Q2 2025 profits surge by 40% year-on-year, while Rio Tinto's copper division reported a 55% revenue jump. These gains aren't anomalies—they're structural. Copper's role in EVs, renewables, and infrastructure projects ensures demand remains robust, even as tariffs create artificial scarcity.

The TACO Trade: Volatility as a Buying Opportunity

The "TACO trade"—short for "Trump Always Chickens Out"—has become a Wall Street mantra. Investors now treat tariff threats as noise, betting that markets will rebound once policymakers retreat from extreme measures. For mining stocks, this dynamic is gold:

• April 2025 Example: When the White House announced "Liberation Day" tariffs (including copper), the S&P 500 fell 5% overnight. But within a week, traders pounced on dips, buying mining stocks like Anglo American (down 8%) and Rio Tinto (down 6%). When the tariffs were delayed, both stocks rebounded +12% in two days.
• July 2025 Play: As the EU tariff deadline loomed, Anglo American dipped 5%—only to rally 8% once delays were hinted.

The TACO trade's success hinges on sector-specific resilience. Mining stocks are less exposed to consumer demand shocks (the core of trade wars) and more tied to physical scarcity. Even if tariffs persist, miners can pass costs to global buyers, unlike manufacturers.

Why the FTSE 100? A Perfect Storm of Tailwinds

The FTSE 100's mining giants benefit from two unique advantages:

1. Global Diversification:
2. Anglo American and Rio Tinto operate in over 20 countries, shielding them from U.S. or EU-specific tariffs. Their exposure to Asia (China's infrastructure boom) and Africa (critical minerals) insulates profits.

3. Example: While U.S. tariffs hit American consumers, Anglo's African copper mines face no such restrictions, allowing arbitrage opportunities.

4. Valuation Sweet Spots:

5. Despite 2025's gains, FTSE 100 miners remain undervalued relative to growth. Anglo trades at 12x forward EV/EBITDA (vs. a 15x sector average), while Rio's P/E is 10% below its 5-year mean.

Risks to the Thesis: When the TACO Trade Falters

No investment is risk-free. Three scenarios could derail this strategy:

1. Prolonged Trade Wars: If tariffs become permanent (e.g., China's copper imports face sanctions), demand could crater. Mitigation: Monitor August 2025 tariff deadlines and copper-to-equity correlation.

2. Overvaluation: If mining stocks reach 20x P/E (a 2023 peak), further gains may stall. Mitigation: Target dips below 10x EV/EBITDA.

3. Environmental Pushback: New regulations on mining emissions could crimp margins. Mitigation: Favor companies (like Rio Tinto) investing in green mining tech.

Investment Call: Overweight FTSE 100 Miners with Caution

The case for Anglo American and Rio Tinto is compelling:

• Buy Signal: Dip buyers should target corrections below £15/USD20 for AAL and £75/USD90 for RIO.
• Hedge: Use inverse ETFs (e.g., ProShares Short FTSE 100) to offset tariff-related volatility.
• Hold Horizon: 6–12 months, with upside catalysts including Fed rate cuts and China's infrastructure spending.

Final Verdict

FTSE 100 mining stocks are the ultimate "anti-trade war" play. Their exposure to tariff-driven commodities, global diversification, and undervalued multiples make them a rare winner in today's fractured markets. While risks exist, the TACO trade's playbook ensures volatility becomes an ally, not an enemy. For investors willing to navigate the noise, these stocks offer a golden hedge against the storm.

Stay disciplined, stay tactical—and keep an eye on those copper prices.