Trump's Tariffs Create Once-in-a-Generation Copper Arbitrage Opportunity

US President Trump's imposition of a 50% tariff on copper has created a massive arbitrage opportunity for traders who can get copper from overseas to the US before the tariff kicks in. The price difference between LME and CME futures has been as high as 28%, with some traders paying top dollar to buy copper from China. The arbitrage trade is winding down as shipping costs and diminishing supply from South America limit the play.

US President Donald Trump's recent announcement of a 50% tariff on copper imports has sparked a massive arbitrage opportunity for traders, with some paying top dollar to secure copper from overseas before the tariffs take effect. The price difference between the London Metal Exchange (LME) and the Comex futures has reached as high as 28%, with traders eager to capitalize on this gap.

The arbitrage trade began in late February when Trump ordered a probe to potentially tariff copper imports. Traders, anticipating the tariffs, started buying copper from China and other countries at a premium, aiming to sell it in the US market before the tariffs were implemented. The trade has been so lucrative that some traders have described it as the best opportunity they've seen in their careers.

David Lilley, a 30-year industry veteran, noted, "It was the best physical trading opportunity I have seen" [1]. The arbitrage trade has led to a significant influx of copper into US ports, with some cargoes piling up due to limited storage capacity. The London Metal Exchange's copper contract has been gripped by a supply squeeze, reflecting the global market's disruptions.

One of the key players in this trade is Mercuria Energy Group, which has been aggressively expanding its metals division. Kostas Bintas, the former Trafigura co-head of metals, has led this push, building a team of over 40 people to capitalize on the arbitrage opportunity. Mercuria has shipped and imported nearly 100,000 tons of copper to the US this year, making it one of the top suppliers [1].

However, the trade is winding down as shipping costs rise and supply from South America diminishes. Traders are now facing increased competition and higher costs to secure cargoes, with some paying premiums of up to $800 a ton. The uncertainty surrounding the tariffs' implementation has also led to a nail-biting wait for traders, who must ensure their cargoes clear customs before the tariffs hit.

The immediate winners in this trade are the commodity traders, miners, and banks that have been able to ship copper to the US. The combined windfall from this trade is estimated to be around $500 million, with the lion's share going to traders [1]. However, the prolonged nature of this arbitrage opportunity has led to a scramble for shipments, with traders employing complex logistical strategies to secure copper from various countries.

In conclusion, Trump's copper tariffs have created a massive arbitrage opportunity for traders, with some paying top dollar to secure copper from overseas. While the trade has been highly profitable, it is now winding down as shipping costs rise and supply diminishes. The immediate winners are the commodity traders, miners, and banks that have been able to capitalize on this opportunity.

References:
[1] https://www.bloomberg.com/news/features/2025-07-11/trump-s-copper-tariffs-deadline-marks-end-of-once-in-a-generation-trade