Every Tuesday afternoon we publish a collection of topics and give our expert opinion about the Equity Markets.

In early July 2025, copper traders were caught off guard when President Trump announced a sweeping 50% tariff on all copper imports into the US. Markets reacted by sending copper prices to record highs. However, in a case of Trump Always Chickens Out (TACO), the administration backtracked the tariffs to only apply to semi-finished products and not refined copper. Markets revolted with the biggest single-day drop in copper prices on record. ABSI this week analyses the recent price action in copper. 

The market reaction to the initial copper tariff was swift as copper futures on the COMEX exploded higher, with prices surging more than 13% in a single session to reach a record high of ~US$5.95/lb. The announcement triggered a wave of speculative activity and panic stockpiling as traders rushed to secure refined copper shipments before the tariff deadline.

Source: Trading Economics

Behind the scenes, however, a fundamental disconnect was beginning to emerge. The US is a meaningful producer of mined copper, generating ~1.3Mt annually, primarily from mines in Arizona, Utah, and New Mexico, but it lacks sufficient domestic refining capacity. Only two major copper smelters operate in the country, together supplying just over half of the national demand for refined copper. To meet the shortfall, the US imports close to 900kt of refined copper each year, primarily from Chile, Canada, and Mexico.

Despite this upstream weakness, the US does retain a reasonably broad downstream manufacturing base, with a network of brass and rod mills, wire producers, and foundries capable of transforming refined copper into semi-finished products like wires, tubes, rods, and sheets. The Trump administration’s original tariff plan, targeting both refined and semi-finished copper, risked penalising domestic manufacturers that relied on these inputs while doing little to strengthen the domestic supply chain.

On July 30th, the White House walked back the tariff in a sharp reversal that echoed previous TACO trade episodes. Refined copper, representing the majority of imports, was formally excluded from the tariff’s scope. The 50% duty would instead apply only to a narrower band of semi-finished copper products.

Markets reacted just as dramatically to the revision. Copper prices collapsed by over 20% in a single trading session (the largest ever single-day loss), erasing the earlier gains and then some. Traders who had stockpiled refined copper in anticipation of a cost hike were left with surplus inventory. COMEX warehouse inventories, which had more than doubled in July, stood in stark contrast to falling global inventories on the LME, further distorting pricing dynamics. The speculative premium evaporated almost overnight. Today, copper is trading ~US$4.40/lb.

Source: Visual Capitalist

Despite the near-term volatility, the long-term case for copper remains robust. Global demand for the metal is accelerating as the world undergoes a massive transformation in energy, transportation, and digital infrastructure. Electric vehicles use three to four times more copper than conventional cars. Renewable energy systems require intensive copper inputs for turbines, inverters, cabling, and substations. The growth of AI and cloud computing has also added a new layer of demand, as data centres and high-performance computing facilities draw heavily on copper-intensive energy systems.

At the same time, supply remains constrained. Years of underinvestment since the last mining boom, coupled with declining ore grades and more challenging permitting conditions, have stifled the pipeline of new projects. Major expansions, such as the Resolution Copper project in Arizona, remain mired in regulatory and environmental hurdles. Brownfield expansions at existing sites may ease some pressure, but they are unlikely to meet the pace of growing global demand.

Analysts broadly agree that the medium-to-long-term trajectory for copper is upward. Goldman Sachs has reiterated its target range of US$10k to US$12k/t (US$4.53-US$5.44/lb), citing structural deficits and growing strategic importance. J.P. Morgan sees prices averaging between US$9.1k and US$9.4k/t (US$4.12-US$4.24/lb) in the second half of 2025, noting that the tariff-induced front-loading of imports could temporarily weigh on prices.

In this context, the Trump administration’s tariff revision seems less like a policy misfire and more like a rapid course correction. By sparing refined copper but targeting semi-finished products, the US hopes to bolster domestic fabrication while still shielding end-users from the cost of upstream disruptions. The success of this strategy will depend on whether American manufacturers seize the opportunity to reinvest in processing capacity or whether the distortions created by tariffs merely shuffle supply chain risks further downstream.

We offer value-rich content to our BPC community of subscribers. If you're interested in the stock market, you will enjoy our exclusive mailing lists focused on all aspects of the market.

To receive our exclusive E-Newsletter, subscribe to 'As Barclay Sees It' now.