Copper futures in the United States were trading at $5.5 per pound, slightly below the record peak of $5.7 reached earlier in the session, yet maintaining a position 10% higher than the closing price on Monday. This surge followed President Trump's announcement of a potential 50% tariff on copper imports. The President mentioned that the tariff on copper would be implemented soon after completing tariffs on pharmaceuticals, though he abstained from providing specific details regarding the timing, any grace periods, or the specific grades of copper that would be affected.
As a result of this announcement, the premium on US copper compared to similar futures on the London Metal Exchange (LME) soared to an unprecedented 25%, as foreign market benchmarks fell. This signals the cessation of the previously growing domestic stockpiles, driven by traders importing copper into the US following tariff threats on base metals initiated in February. Should the tariff be enacted, it could pose a risk to the domestic copper supply, given the relatively low ore production. Additionally, the refining capacity in the US might come under strain, as there are only two smelters in the country capable of handling such processing.
