A new trade war heats up: Trump’s copper tariffs spark global tension

A new trade war heats up: Trump’s copper tariffs spark global tension

Copper markets were rocked this week after US President Donald Trump pledged to impose a 50% tariff on copper imports, a move that stunned producers, traders, and governments across major mining nations. The announcement—delivered at a press conference Tuesday—sent immediate ripples through global markets, even as the specifics of the policy remain unclear, the Financial Times reported.

While US copper futures on the Comex exchange briefly surged on the news, prices on the London Metal Exchange (LME) fell Wednesday, as traders bet the proposed tariff could dent global demand for the metal. The US imports about 60% of its copper, primarily from Chile, while the rest is met through domestic mining and recycled materials.

Trump’s tariff threat has placed exporting nations on edge. Zambia, one of Africa’s top producers, called for a waiver, warning that the move could undermine US interests on the continent. “The whole premise of the Lobito Corridor is that these critical minerals such as copper should be going to the US,” said Kakenenwa Muyangwa, chair of Zambia’s state-owned mining firm ZCCM, referencing Washington’s flagship infrastructure project in the region.

In Chile, the world’s largest copper producer and a US free trade partner, the national mining association Sonami denounced the proposed tariff as “not justified.” The group warned it could deter new investment in an industry already sensitive to price volatility and trade disruptions. “The threat of a new trade war between major powers introduces volatility into the markets,” Sonami said in a statement.

US copper futures were trading around $5.53 per pound on Wednesday—around 28% higher than the global LME benchmark. Yet analysts say the premium falls well short of the proposed 50% levy, suggesting skepticism in the market about whether the tariff will actually be implemented.

“It is not certain yet, and even when it is signed, it may not be the final answer,” said Alice Fox, an analyst at Macquarie. “The expectation is that there will probably be some negotiation around it, possibly quotas.”

The White House has yet to release details of the plan, such as which forms of copper—like concentrate or cathode—would be covered. The proposal appears to follow a Section 232 investigation launched in February into the national security implications of copper imports. That inquiry has not yet concluded.

While some US-based producers like Freeport McMoRan and Rio Tinto could benefit from a price bump, analysts question whether the policy will spur meaningful domestic investment. “This is a 10-year project, not a one-administration project,” said Ben Davis of RBC Capital Markets. “No one has any confidence these premiums will last. So who on earth is going to build that stuff?”

Meanwhile, diversified miners with global operations, such as BHP and Anglo American, saw their shares dip following Trump’s announcement. Executives at major mining companies said they were waiting for clarity before assessing the long-term impact. “You just don’t know how long it’s going to be there, whether it’s just a negotiating tactic,” said one executive.

Commerce Secretary Howard Lutnick said the tariffs could be implemented as early as the end of this month, though many in the industry remain cautious. Traders noted that copper imports into the US had surged earlier this year in anticipation of potential duties but now expect those flows to slow sharply, with shipments set to arrive after August 1 possibly rerouted to avoid the new costs.

Copper, used in everything from electric vehicles to construction and consumer electronics, is considered a bellwether for industrial demand. Global inventories have been running low, though recent data showed a modest uptick in LME stocks.

Analysts expect LME copper prices may weaken over the next six to twelve months if the market loosens. But with geopolitical trade risks now layered on top of structural supply concerns, volatility in one of the world’s most vital commodities may be far from over.