New York, July 31, 2025 – The global copper market was thrown into disarray on Wednesday as U.S. copper futures on the Comex exchange plummeted by more than 20%, marking the largest single-day decline in the metal’s history since records began in 1968. This seismic shift followed President Donald Trump’s unexpected decision to exempt refined copper from a previously announced 50% import tariff, a move that blindsided traders and reshaped expectations for the critical industrial commodity. The fallout has sent shockwaves through global markets, raising questions about the economic implications for industries, consumers, and U.S. trade policy.
A Tariff Twist That Upended Markets
On July 8, 2025, President Trump announced a 50% tariff on copper imports, citing national security concerns under Section 232 of the Trade Expansion Act of 1962. The proclamation, which targeted semi-finished copper products like pipes, wires, and rods, was intended to bolster domestic production and reduce reliance on foreign imports, particularly from countries like Chile and Canada, which supply over 90% of U.S. copper imports. The announcement triggered a frenetic rally in New York copper futures, with prices surging 13% in a single day to a record high of $5.69 per pound, as traders anticipated higher costs for U.S. importers.
However, less than 48 hours before the tariffs were set to take effect on August 1, the White House issued a clarification that stunned the market: refined copper, the most widely imported form of the metal, would be exempt from the 50% duty. Instead, tariffs would apply only to semi-finished products, with a potential phase-in for refined metal not expected until 2027, pending further evaluation by the Department of Commerce. The sudden pivot led to an immediate unwinding of speculative positions, with Comex copper futures collapsing to $4.37 per pound by Thursday afternoon, erasing a premium over London Metal Exchange (LME) prices that had reached 30% just days earlier.
“The market was completely caught off guard,” said Li Xuezhi, head of research at Shanghai-based Chaos Ternary Futures. “Traders had positioned for a universal tariff, and the exemption of refined copper obliterated those bets overnight.” The price gap between U.S. and global benchmarks, which had widened to $3,095 per ton earlier in the week, collapsed to near parity, signaling a rapid normalization of trade expectations.
Global Copper Market in Turmoil
The ripple effects of the tariff exemption were felt far beyond U.S. shores. On the LME, the global benchmark for copper, prices fell by 0.6% to $9,642 per ton, reflecting concerns that reduced U.S. demand could soften global consumption. Earlier in the year, anticipation of tariffs had spurred a massive influx of copper shipments to U.S. ports, with Macquarie analysts estimating that imports in the first half of 2025 reached 881,000 tons—double the underlying U.S. requirement. This stockpiling had fueled a lucrative arbitrage opportunity, as traders rushed to deliver metal before the August 1 deadline.
The exemption of refined copper, however, has upended these dynamics. Bloomberg reported that at least four vessels carrying copper accelerated to U.S. ports to beat the deadline, but the exclusion of refined metal has led to a steep drop in warehouse withdrawal orders in Asia, with over 25,000 tons canceled—the largest decline since 2019. “Suppliers are now redirecting copper to Europe and other markets where costs remain lower,” noted Yongcheng Zhao, principal analyst at Benchmark Mineral Intelligence. This shift is expected to reshape global trade flows, with long-term implications for supply chains.
Economic Implications: Inflation, Jobs, and Industry Concerns
The tariff saga has sparked widespread debate about its economic consequences. While President Trump has framed the 50% tariff as a means to revive domestic copper production and secure supply chains for critical industries like semiconductors, electric vehicles, and defense, analysts warn that the policy could backfire. The U.S. relies on imports for nearly half of its copper consumption, and domestic mining and smelting capacity is insufficient to meet demand. According to Jefferies LLC, the U.S. lacks the infrastructure to achieve self-sufficiency, meaning tariffs are likely to translate into higher costs for consumers and businesses.
“Copper is a cornerstone of the U.S. economy, from wiring in homes to batteries in data centers,” said Carsten Menke, lead researcher at Julius Baer. “A 50% tariff on semi-finished products will drive up costs for industries already grappling with steel and aluminum tariffs.” The Semiconductor Industry Association echoed these concerns, noting that higher copper prices could undermine efforts to build a competitive domestic chip manufacturing sector.
Economists at the Tax Foundation estimate that the tariffs could contribute to a weighted average tariff rate increase, potentially reducing U.S. GDP and leading to job losses. Yale projections cited on X suggest that Trump’s broader trade policies could result in 376,000 job losses by the end of 2025. Consumers may also feel the pinch, with CBS News reporting that the cost of appliances, electric vehicles, and home repairs could rise significantly due to higher copper prices.
Industry Reactions and Geopolitical Tensions
Major copper producers, such as Freeport-McMoRan and Southern Copper, saw their stocks decline by 10% and 6%, respectively, in after-hours trading following the tariff exemption announcement. Rio Tinto, which operates the Kennecott mine in Utah and holds a stake in a Chilean operation, said it was too early to assess the full impact, citing uncertainty over which products would be affected.
Globally, the tariff has strained trade relations. China, facing a 54% tariff on its copper exports to the U.S., has vowed countermeasures, while the European Union, hit with a 20% levy, is expected to retaliate. Japan has urged exemptions, and Chile, a major U.S. supplier, benefits from a free-trade agreement that may mitigate some impacts. However, the lack of clarity on tariff specifics has left companies scrambling to adjust supply chains and pricing strategies.
Looking Ahead: Volatility and Uncertainty
The copper market’s rollercoaster ride is far from over. While the exemption of refined copper has alleviated some immediate pressure, the White House’s indication of a potential phase-in of duties by 2027 keeps uncertainty alive. Global copper demand is projected to surge by 70% to 50 million tons annually by 2050, driven by the clean energy transition and the artificial intelligence boom. Yet, supply constraints—exacerbated by aging mines and a 40% drop in ore grades since 1991—mean that prices are likely to remain volatile.
For now, the U.S. copper market is grappling with the fallout of a policy that promised to reshape domestic industry but has instead delivered chaos. As Arnaud Bertrand noted on X, “Making copper 25% more expensive in the U.S. than elsewhere could undermine manufacturing competitiveness.” With legal challenges to Trump’s tariff authority pending in the U.S. Court of International Trade and global trade patterns in flux, the full impact of this high-stakes gamble will unfold in the months ahead.