Trump imposes 50% tariffs on copper imports, excluding refined metal products.
US copper prices plunge 22% on Comex after initial trader rush and shock.
Exemption of refined copper disrupts global trade, sparks re-export speculation.
Tariffs target semi-finished goods like wires, pipes, cables, and connectors.
With US President Donald Trump imposing 50% tariffs on copper imports, the global copper market has faced a shock leading to unprecedented policy swings and trade dislocation.
Despite the tariffs on copper, Trump has exempted refined metals from it, ones that are the mainstay of international trading. As a result of this step, there has been a record plunge for US prices, following a period of high profits for traders who transported metal to America before the levies entered into the market.
Speaking to Bloomberg, Li Xuezhi, head of research at Chaos Ternary Futures Co., a unit of a commodities hedge fund at Shanghai said, “This has badly deviated from market expectations.” He further noted that those betting on higher US prices have “wasted all their efforts” and global copper flows will return to normal.
Copper futures at New York’s Commodity Exchange fell by more than 22% - the highest ever, as traders recalibrated the value of metal in the US versus the rest of the world. As prices on the London Metal Exchange fell by a much smaller margin, the front-month futures of Comex came to a discount against the LME benchmark, from a 30% premium, more than a week ago.
Exempting refined copper will disrupt global trade of the metal that plays a crucial role in the global economy, given its widespread usage in electrical wiring. Currently, massive volumes of the same are in US warehouses and there’s already speculation regarding potential re-exports.
