A large dose of chaos has been injected into copper markets following President Trump’s threat to impose 50% tariffs on copper imports.
Copper prices surged on Tuesday and remain near a record. I would keep an eye on top copper stocks such as Freeport-McMoRan (FCX) and Southern Copper Corp. (SCCO) today.
Here are some of Wall Street’s early reactions:
Goldman Sachs’ Eoin Dinsmore
“Given the increased risk of a 50% tariff, we expect a further acceleration in shipments into the US in the coming weeks, as the incentive to front-run the tariff implementation has increased. With the Dec-25 COMEX-LME arbitrage now trading at ~$3,000/ton — pricing an implied ~30% tariff — we keep our long Dec-25 COMEX-LME arbitrage trade recommendation open. As we recently highlighted, there was a meaningful risk of a 50% tariff, which is now playing out. In time, the copper tariff may revert to 25%, but steel and aluminium tariff increased to 50% in June, and markets have priced around 80% of those tariffs, factoring in uncertainty on potential future exemptions – which suggests copper should move to price a 40% import tariff in Dec-25.”
Jefferies’ Christopher LaFemina
“Trump’s announced 50% tariffs on copper imports came as a surprise in terms of timing and magnitude, but tariffs were likely coming at some point. Higher copper prices in the US should ultimately incentivize growth investment in mines and new smelters/refineries. We believe the longer term aim of the Trump administration may be for the US to be fully self-sufficient in copper, but mines take too long to develop for this to be achieved in less than a 10-year time horizon, in our view. Getting there faster from a smelting/refining perspective is possible and would erode a competitive advantage that China currently has in the copper supply chain. However, as we discuss in this note, the US will still rely on foreign mines to meet demand for the foreseeable future. It is therefore possible that tariffs on refined copper imports will persist for a relatively long duration, which is what we have seen in the US steel industry following the roll-out of section 232 tariffs for steel by President Trump in 2018.”
