Trump announced a 50% tariff on copper imports, which is expected to take effect within 30 days. Citi predicts that an official announcement about this tariff will come soon. The tariff has caused a spike in copper prices, as the US depends on imported copper for infrastructure and electrification projects. This decision may raise costs because it can take years or decades to develop domestic mines. There are concerns about how this will affect US competitiveness, as the new tariff increases the cost of essential raw materials. While there is a need to boost mine supply, the fluctuating tariff may not effectively meet this demand. What we know so far is that a new copper import tariff is coming—specifically, a 50% rate that the market expects will be confirmed soon. Trump’s decision has sparked interest in the market and caused a rapid rise in futures. Prices surged almost immediately since copper is a vital material for power grids, construction, and electric vehicles, and the US imports a significant amount. However, building enough domestic extraction to meet this demand is a long-term challenge due to lengthy permits, community engagement, and environmental approvals. Citi suggests a formal announcement is imminent, and this anticipation has already contributed to rising prices. The situation is quite clear: higher import costs create tighter supplies, and steady demand leads to price increases. This issue goes beyond just pricing; it also affects manufacturing margins and overall development costs. We believe this new tariff could make American manufacturing more expensive. Domestic producers who rely on consistent copper supplies—especially those with limited inventories—might see this impact their financials sooner than expected. It’s also important to consider not just the main implications but also the ripple effects across the supply chain, delivery schedules, and the confidence levels that traders keep a close eye on. Given these factors, traders are now focusing more on immediate supply policies instead of broader trends. We’re monitoring how warehouses react. LME data is becoming essential again. If refined metal starts moving more quickly to China or remains off US shores, it could affect options trading. Traders are aware that unexpected duties increase basis risk, and right now, there’s little clarity on exemptions or specific country exceptions. From our perspective, the sharp rise in prices isn’t just speculation. Calendar spreads indicate tighter near-term supply, and there’s been a slight flattening in longer contracts. Short-term contracts are reacting more strongly than those further out, indicating early signals of pricing risk. Currently, traders should keep their biases short-term and exposure limited. If tariffs remain a focus through July, this may not be the time to make large directional bets unless there’s solid physical information. Hedging strategies based on higher implied volatility, especially for August-September contracts, could yield better results. Regarding US mining, while a strategic stockpile could, in theory, mitigate shocks, it’s not significantly expanding right now. The idea that prices will stabilize once domestic supply catches up doesn’t align with real-world timelines. The delayed cost input cycle into futures curves paints a complicated picture but could lead to further moves in related metals. In this context, traders would benefit more from tracking bonded warehouse drawdowns and origin-based premiums instead of relying on broad market sentiment. When macro factors combine with supply-side cost increases, the details in our models and client activity become crucial for decision-making—not sweeping generalizations.

here to set up a live account on VT Markets now