Former U.S. President's 50% Tariff on Semi-Finished Copper Shakes Global Markets

The 's announcement of a 50% tariff on imported semi-finished copper, excluding refined copper, sent shockwaves through global markets. This policy, while not as impactful as initially anticipated, still had significant repercussions, particularly in Asia. The Comex copper futures in the U.S. saw a significant drop, while the London copper futures initially surged before retreating. The ripple effect was most pronounced in Asia, where copper mining stocks experienced a collective decline. Major players such as Jiangxi Copper and Zijin Mining were among those affected.

The announcement sparked a wave of uncertainty and speculation among investors. The exclusion of refined copper from the tariff list somewhat mitigated the immediate impact, but the broader implications for the copper industry remained a concern. The policy was seen as a strategic move to protect domestic industries, but it also raised questions about potential retaliatory measures from other countries.

The tariff announcement came at a time when the global copper market was already grappling with various challenges, including supply chain disruptions and fluctuating demand. The additional layer of uncertainty introduced by the tariff policy further complicated the market dynamics. Investors and industry analysts were left to navigate the new landscape, assessing the long-term effects on copper prices and the overall health of the mining sector.

The policy's impact was not limited to the copper industry alone. Other related sectors, such as manufacturing and construction, also felt the reverberations. The tariff on semi-finished copper could potentially increase production costs for these industries, leading to higher prices for end consumers. The broader economic implications of the policy were a subject of intense debate, with some arguing that it could spur innovation and domestic production, while others warned of potential economic fallout.

In response to the tariff announcement, some industry experts called for a more balanced approach to trade policy, emphasizing the importance of collaboration and mutual benefit. They argued that unilateral tariffs could lead to a cycle of retaliation, ultimately harming global economic stability. The situation highlighted the need for a more coordinated and cooperative approach to addressing trade imbalances and protecting domestic industries.

The tariff policy also raised questions about the future of U.S. trade relations with its major trading partners. The move was seen as a continuation of the previous administration's protectionist stance, which had already strained relations with countries. The new tariff could further complicate efforts to rebuild trust and foster cooperation in the global trade arena.

Analysts noted that the tariff policy was a significant market surprise, with some predicting further declines in copper prices. The policy was seen as a response to industry lobbying, which had previously emphasized the difficulty of immediately replacing all copper imports. During the initial disclosure period of the copper tariff, commodity traders engaged in large-scale arbitrage activities, with the price of copper in New York exceeding the international price by more than 28%.

Given the substantial amount of copper already transported to the U.S., analysts believed that the high local inventory could suppress copper prices and create a negative price differential with international prices. The observable refined copper inventory in the U.S. was estimated at 250,000 metric tons, with an additional 350,000 metric tons of non-warehouse or off-market inventory, totaling over 600,000 metric tons. This was sufficient to meet short-term U.S. consumption, potentially forcing in-transit refined copper to seek alternative destinations.

However, analysts also noted that refined copper could still face future tariff threats. According to a White House statement, the U.S. Department of Commerce recommended delaying the imposition of import tariffs on refined copper, with the tax rate set at 15% starting in 2027 and increasing to 30% in 2028. Despite this, the future demand outlook for refined copper remained positive, driven by the 's ambition to revitalize domestic manufacturing. The U.S. was expected to further increase imports of refined copper to support the return of manufacturing.