Copper prices witnessed a sharp increase of more than 5% in New York, surpassing other global benchmarks, following US President Donald Trump’s announcement of a potential 25% tariff on metal imports, reported Bloomberg.
President Trump’s speech to Congress on Tuesday sparked a rally in copper prices on the Comex trading platform during Asian trading hours.
Market participants reacted swiftly to the prospect of larger-than-anticipated tariffs on copper, which could be implemented sooner than expected.
Last week, President Trump announced that the Commerce Department will conduct a comprehensive investigation that might lead to copper tariffs on national security grounds.
This has already prompted a notable rise in Comex prices and created a growing disparity with equivalent prices in London and Shanghai.
Although the investigation could span several months and the tariff size remains unspecified, President Trump declared that he had ordered a 25% levy on copper, along with aluminium and steel.
“I have also imposed a 25% tariff on foreign aluminium, copper and steel. Tariffs are about making America rich again. It is happening and it will happen rather quickly,” he stated.
The US President has signed an executive order to impose the levy on aluminium and steel starting from 12 March.
Saxo Bank head of commodity strategy Ole Hansen commented: “A 25% tariff was clearly not what the market was expecting before those comments, and now traders are scrambling to price in the correct level, whatever that might end up being.”
“Whatever the final tariff is, the disruption to global trade flows is very real,” Hansen added.
The surge on the Comex also led to a smaller rally on the London Metal Exchange (LME), where three-month copper prices climbed by as much as 2.4%.
For several months, New York futures have been trading at a significant premium to the LME, reflecting the likelihood of tariffs.
Wednesday’s additional increase left Comex copper trading approximately 11.5% higher than the LME, approaching a 13% peak observed last month.
This substantial price difference has triggered a global search for copper that can be delivered to the US before the imposition of any tariffs.
Furthermore, it is expected that traders will intensify these efforts after Wednesday’s price jump.
Recent trends indicate that Comex copper stockpiles have been decreasing, suggesting that US manufacturers might be stocking up in anticipation of the tariffs.
