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| US Copper Tariffs |
Impact of US 50% Copper Tariffs on Global Trade Dynamics
Physical Inventories and Arbitrage in Focus
The focus keyphrase "US copper tariffs" is driving intense market reactions as the US prepares to impose a 50% tariff starting August 1. This tariff follows the Section 232 investigation concluded in mid-June. However, critical details such as tariff scope on cathodes, raw materials, and scrap remain unclear. The uncertainty fuels volatility in both the London Metal Exchange (LME) and Comex markets, pushing traders to reassess supply chains and pricing strategies.
The US currently imports over half of its refined copper cathodes from Chile, Canada, Peru, and Mexico—nations covered by free trade agreements. Yet, exemptions are uncertain, and the Copper Development Association warns that tariffs on cathodes and scrap could elevate manufacturing costs, adversely impacting US energy security. Instead, targeted tariffs on semi-finished copper products are under discussion to stimulate domestic recycling and secondary refining capacity.
Meanwhile, physical copper inventories in the US have surged, particularly at Chicago Mercantile Exchange warehouses, more than doubling since January 2025. This buildup may cushion short-term supply shocks post-tariff implementation. Additionally, the divergence between Comex and LME copper prices has widened, reflecting regional supply dislocations rather than global demand strength. Without clear policy guidance, this price gap could expand, forcing global producers to reconsider contract structures and shipping destinations.
ScrapInsight Commentary
The impending US copper tariffs introduce significant uncertainty into global markets. While aiming to bolster domestic production, the tariffs risk disrupting global trade flows and elevating costs in downstream industries. Market participants should monitor policy updates closely, as tariff scope and exemptions will shape price trajectories and recycling incentives in the months ahead.
