FX.co ★ Copper Holds Near Record High

Copper futures in the United States remained steady at $5.55 per pound on Friday, maintaining the upward trend that peaked at $5.70 on July 8th. This surge followed President Trump's announcement of a 50% tariff on copper, set to take effect on August 1st. The intent behind this tariff is to strengthen the domestic copper industry by reducing dependency on imported refined copper. However, new production capacity cannot be developed quickly enough to replace imports. Consequently, the price differential between US copper and similar futures on the London Metal Exchange (LME) widened to a record 25%, as foreign benchmarks dropped. This shift indicates a halt in the growth of domestic inventories because copper imports into the US have increased since tariff threats on base metals emerged back in February. If these tariffs are enforced, they pose a risk to the domestic supply chain, given that the US imports nearly half its copper, primarily from Chile. The country's refining and smelting capabilities could be severely strained, as there are only two operational smelters nationwide.