Although the administration has presented the measure as a response to China's growing control over global copper production, the countries likely to be most affected will be Chile, Canada, and Mexico, the main suppliers of refined copper and copper-related products to the United States.
US President Donald Trump has ordered his government to explore possible tariffs on copper imports, marking another significant step in his administration's current trade strategy.
The executive order, signed on Tuesday (February 25), instructs the Department of Commerce to investigate whether imported copper poses a risk to national security under Section 232 of the Trade Expansion Act of 1962. The decision has already sparked a strong reaction in the global copper market, widening price differentials for the red metal and prompting traders to begin rushing shipments to the US.
According to the Globe and Mail, White House trade adviser Peter Navarro said the move is designed to curb the expansion of China's copper sector while addressing vulnerabilities in the US supply chain. He emphasized the need to restore copper mining, smelting, and refining in the country, citing military and technological applications.
Despite Trump's prolonged pressure to balance the trade balance, the US currently has a surplus in copper trade. In 2024, the country exported $11.3 billion worth of copper and imported $9.6 billion, according to census bureau data.
US officials argue that changes in supply and demand forecasts create a risk to national security.
Trump has made extensive use of tariffs as part of his trade policies, and previously eliminated exemptions from the 2018 tariffs on steel and aluminum. More recently, he has threatened neighboring countries (Canada and Mexico) with 25 percent tariffs on all imports. These could take effect next week, although plans have changed several times.
The president has also promised broader tariffs to match rates imposed by other nations, targeting industries such as automotive, semiconductors, and pharmaceuticals.
Traders seek copper arbitrage opportunities
The announcement of possible tariffs on copper has caused copper prices in the United States to skyrocket, creating an arbitrage opportunity that traders have been quick to exploit. Metal prices on the Comex exchange in New York rose by up to 4.9 percent, with copper trading at more than $1,000 above the London Metal Exchange (LME) benchmark.
Earlier this month, copper contracts on Comex reached a premium of $1,300 over LME prices before falling to $600 and then rising again after Trump's announcement. The investigation into copper could take months to complete, giving traders more time to move the metal to the US without penalties.
According to industry sources, in recent weeks major companies, including Glencore (LSE:GLEN,OTC Pink:GLCNF) and Trafigura Group, have begun shipping copper to the US market. While most of their shipments come from South America, there have also been inquiries about shipping copper from Asian warehouses tracked by the LME.
Potential tariffs are also changing global copper flows: requests to withdraw copper from LME warehouses in Asia increased by more than 93,000 metric tons in recent days, marking the largest four-day reduction since 2013.
The shift is redirecting metal that normally flows to China, the world's largest copper consumer, toward the US market.
Rising copper prices in the US are also driving up costs for domestic manufacturers, who have paid an average premium of 8 percent over global prices since Trump first floated the idea of imposing tariffs on copper in late January.
One challenge for copper importers is that only a limited number of producers are approved for Comex deliveries, and Chinese smelters are notably absent from the list. In addition, Trump's current 10 percent tariff on Chinese products, implemented earlier this month, has deterred some companies from targeting the US market.
As global copper markets brace for uncertainty, companies with assets in the US are looking to capitalize on the government's efforts to shore up domestic supply. Among them is American Pacific Mining (CSE:USGD,OTCQX:USGDF), which believes its two US-based copper projects could play a role in Trump's copper ambitions.
“Current market dynamics and US policy trends underscore the strategic value of our US-based copper assets. With projects such as our Madison Copper-Gold project in Montana and the Palmer Copper-Zinc project in Alaska, we are well positioned to potentially supply the growing domestic demand for copper, a critical metal for the US economy and the transition to clean energy,” said Warwick Smith, CEO of American Pacific, in a statement.
Giann Liguid, Investment News Network