Asia shares flat as dollar, stock futures dip on Trump’s copper tariff

Copper prices moved higher after Trump said the US would begin levying a 50% tariff on copper imports from Aug. 1

US equity-index futures retreated along with the dollar after President Donald Trump announced a 50% tariff on copper and unveiled a new round of letters demanding higher levies, dialing up trade tensions again.

Contracts for the S&P 500 index edged down 0.2% and a gauge of the dollar dipped by 0.1% Thursday. Treasuries rose slightly while Asian shares were flat. Bitcoin held near a record high it hit on Wednesday. Earlier, Brazilian assets plunged after Trump announced new tariff letters that included imposing 50% levy on goods from the country.

Copper prices moved higher after Trump said the US would begin levying a 50% tariff on copper imports from Aug. 1, confirming a move, which will hurt producers who rely on the industrial material. Copper futures on the London Metal Exchange — the global benchmark — gained 0.4% to $9,664.50 a ton, while contracts on Comex rose almost 3%.

“Latest tariff news continues to look like further inflationary acts of self-harm to the US economy, which lend themselves to a continuation of the sell American theme,” said Ray Attrill, head of FX strategy at National Australia Bank in Sydney.

Trump has signaled a renewed determination to push ahead with his plans to heavily tax foreign imports after pausing his so-called ‘reciprocal’ tariffs until July 9. Even so, investors have been piling back into stocks - the S&P 500 hit a record last week - as traders brush off fears that the levies would lead to a meaningful slowdown for the global economy or company earnings.

Global producers have raced to get ahead of Trump’s planned copper levies, including in recent days shifting deliveries to Hawaii and Puerto Rico to cut shipment times.

Investors bearish on US assets had sold the dollar as part of the ‘Sell America’ trade. A gauge of the currency has declined 8.7% this year.

“The selloff in the dollar in response to the copper tariff announcement suggests the sell America narrative is still intact, at least in the currency markets,” said Carol Kong, currency strategist at Commonwealth Bank of Australia. “Unless the Trump administration returns to more conventional policy and policy delivery, the sell America narrative can continue to weigh on the dollar for longer.”

Trump also said Wednesday he would levy a 30% rate on Algeria, Libya, Iraq and Sri Lanka, with 25% duties on products from Brunei and Moldova and a 20% rate on goods from the Philippines. The levies were largely in line with rates Trump had initially announced in April against those countries, though Iraq’s duties are down from 39% and Sri Lanka’s reduced from 44%.

Brazil’s 50% rate marked one of the highest levies announced so far, and are set to hit in August. Trump cited the treatment of former President Jair Bolsonaro in his letter to the nation, calling on authorities to drop charges against him over an alleged coup attempt. Brazil will respond to the US using its reciprocity law, President Luiz Inacio Lula da Silva said.

Elsewhere, Japanese government bonds were steady ahead of an auction of 20-year JGBs Thursday. The sale will beam the searchlight back on rising yields as a looming election heightens concerns about fiscal expansion.