Raw copper spared, markets react sharply
A significant exemption in President Donald Trump’s 50% copper tariff order has caused turmoil in copper markets, as the final rule excludes raw materials like copper cathode, ores, concentrates, and scrap. Instead, the duties apply only to semi-finished products such as pipes, wires, rods, and sheets, as well as copper-intensive goods like cables and electrical components.
Analysts had widely anticipated that raw copper imports would be subject to the new tariffs. The announcement prompted a sharp correction in U.S. copper prices. COMEX copper futures dropped 19% in intraday trading, the largest recorded single-day decline, according to ING. The CME price premium over the London Metal Exchange collapsed from $2,637 to just $90 within hours.
Market rebalancing and production challenges
The dramatic shift reflects the market’s adjustment to the unexpected exemption. Earlier price hikes had been driven by the assumption that refined copper would be taxed, prompting a surge in imports. Now, traders are re-evaluating supply chains and pricing, with downward pressure expected to continue on U.S. markets and spill over into global exchanges.
The U.S. currently imports roughly half of its copper, mostly from Chile, Canada, Peru, and Mexico. Building domestic production capacity would require decades. Analysts at Deutsche Bank noted that while the exemption may avoid some demand destruction, it places pressure on COMEX and may trigger shipments of surplus refined copper back into the global market.
Anglo American CEO Duncan Wanblad stated that while current inventory placements are dislocated, medium- and long-term demand for copper remains strong due to infrastructure, electric vehicles, and data center needs.
Implications for consumer goods and industries
Even though raw copper is not affected, the tariff on semi-finished products could raise manufacturing costs for consumer goods. Items like air conditioners, refrigerators, and plumbing materials rely on components directly impacted by the new duties.
Manufacturing experts warn that the cost increases may eventually be passed on to consumers. While current copper inventories are high, firms using tariffed components may face rising production costs. Michael Reid of RBC Capital Markets noted that industries such as housing and construction, which use copper wiring and plumbing parts, may see the largest price impact.
Still, he emphasized that the broader effect on final consumer prices may be moderate. For example, a full pass-through of copper costs on a $10,000 housing component would raise it to $15,000, a 10% increase relative to the total home price.
Policy details and industry outlook
The final order clarified that copper tariffs would not be cumulative with new auto import duties. Only one set of tariffs would apply per product. This policy aims to limit overlapping charges but still raises operational complexity for manufacturers.
As the market recalibrates, the outlook for copper remains tied to broader industrial demand and policy developments. Traders will continue to watch for shifts in supply chains, possible tariff revisions, and inventory movements in the U.S. and abroad.
