Metals Markets on Hold: The US-China Trade Talks Will Shake Things Up

The metals markets are stuck in a holding pattern, their prices oscillating within a tight range as investors wait anxiously for the U.S.-China trade talks in early May. With tariffs on metals like steel, aluminum, and copper hovering near historic highs—145% for U.S. imports from China and 125% in retaliation—the stakes are high. The outcome of these negotiations could break the deadlock and send prices soaring or collapsing. Let’s dissect what’s at play and how to position your portfolio.

Why Metals Are Stuck in Neutral

The LME copper price has bobbed between $8,500 and $9,600 per metric ton for months, a stark contrast to its volatile swings in 2023. Aluminum and zinc are similarly stagnant, their prices pinned down by uncertainty over the trade talks.

The root of the stagnation? Fear of escalation. The U.S. and China have been slapping punitive tariffs on each other’s goods since 2020, with metals bearing the brunt. U.S. tariffs on Chinese steel and aluminum have hit 145%, while China retaliated by raising tariffs on U.S. energy exports and imposing export controls on critical minerals like lithium and rare earths.

The Trade Talks: A Lifeline or More Theater?

The upcoming U.S.-China meetings in Geneva (May 10–11) are the first high-level in-person talks since 2020. Treasury Secretary Scott Bessent has framed the goal as de-escalation, not a grand deal. That means the talks might focus on lowering tariffs on non-strategic goods—like copper wiring or aluminum cans—while leaving strategic sectors (semiconductors, pharmaceuticals) untouched.

But here’s the catch: China has insisted the U.S. must first reduce its tariffs before Beijing reciprocates. U.S. negotiators, however, want a quid pro quo. If they can’t agree on a framework, the status quo of 145% tariffs will linger, keeping prices artificially inflated and supply chains in chaos.

What Investors Need to Watch

1. Tariff Rollbacks: Even a 10% reduction in U.S. or Chinese tariffs on non-strategic metals could trigger a price drop. For example, a 20% cut in copper tariffs might push LME prices down to $8,000/ton.
2. Federal Reserve Moves: The Fed’s next rate decision (July 2025) could influence demand. A rate cut would boost industrial activity, lifting metals prices—unless trade tensions cancel out the benefit.
3. EU’s Carbon Border Tax (CBAM): The EU is expanding CBAM to downstream products like steel, which could raise costs for non-EU exporters. This favors EU producers but hits global traders.

The Companies to Watch

• Freeport-McMoRan (FCX): A copper giant that thrives when prices stabilize.
• Nucor (NUE): A U.S. steelmaker benefiting if tariffs on imports drop.
• BHP (BHP): A diversified miner exposed to both metals and energy—watch for shifts in China’s export controls.

The Bottom Line: Play the Pivot Point

The May 10–11 talks are a make-or-break moment for metals. Here’s how to play it:
- If tariffs drop: Buy into beaten-down stocks like NUE and FCX.
- If talks fail: Short copper ETFs (e.g., COPX) or go long on gold (GLD), which often rises amid trade wars.
- Stay agile: Keep an eye on the Fed’s rate signals and CBAM developments—they could offset trade outcomes.

The data is clear: the U.S.-China tariff war has already cost China 16 million jobs and pushed U.S. GDP into contraction. A deal could reverse the damage—but without it, metals will stay stuck in limbo.

Action Alert!: Use this waiting period to layer into positions. If you’re bullish on a tariff truce, buy dips in FCX and NUE. If you’re bearish, use options to hedge against a collapse. The market’s on pause—don’t let your portfolio be.

Conclusion: The U.S.-China trade talks are the single most important event for metals markets in 2025. With tariffs at record highs and global supply chains straining, even incremental progress could break the price logjam. Investors must monitor the talks closely—this isn’t just about metals; it’s about the future of global trade. Don’t get caught flat-footed.