Trump Tariffs Trigger Historic Crash in U.S. Copper Market
In a stunning reversal that jolted metals markets, President Trump announced a 50% tariff on copper products—but exempted raw copper materials, sparking a 20% plunge in U.S. copper futures on Wednesday. If losses hold, it would mark the biggest single-day drop in copper prices since records began in 1968, eclipsing even the 1987 Black Monday crash.
🔧 What Happened?
Earlier this month, Trump said he intended to slap a 50% import tax on copper—sending U.S. copper prices soaring well above global benchmarks. Businesses scrambled to import copper ahead of the Aug. 1 deadline, and domestic warehouses in Baltimore, New Orleans, and Detroit filled up with supplies.
But on Wednesday, just days before the tariff was to take effect, the White House issued a sharp pivot: the 50% duty would apply only to processed copper products—including wire, tubing, sheeting, and parts containing copper—not to raw copper materials like cathodes, concentrate, or scrap.
This carve-out stunned the market, crashing copper futures to pre-announcement levels—around $4.50 per pound, in line with global prices set by the London Metal Exchange.
📉 The Fallout
The policy shift dealt a blow to U.S. copper producers and companies preparing for a raw materials tariff:
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Freeport-McMoRan, the largest U.S. copper miner, fell 9.5%.
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Ivanhoe Electric, which is planning a major new Arizona mine, plunged 17%.
Meanwhile, domestic manufacturers of plumbing, electronics, and wiring stand to benefit, as the tariff shields them from foreign competition in finished products without increasing input costs.
The tariff also applies only to the copper content of mixed goods—such as electrical components or pipe fittings—not their full value. Automobiles are exempt from the copper tariff entirely.
⚙️ Policy Confusion and Market Whiplash
This move is the latest example of the volatility surrounding Trump’s trade agenda. While the original announcement fueled speculation that new smelting and mining capacity might be encouraged, the reality undercuts that optimism.
Bernstein analyst Bob Brackett warned investors weeks ago that the president’s off-the-cuff policy signals could lead to disappointment:
“Trump has declared massive tariffs before and then not implemented them,” Brackett wrote in a July 9 note.
He also noted:
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Over half of U.S. copper is imported, much of it from Chile, which had been lobbying for an exemption.
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The U.S. only has two operating copper smelters.
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Building a new smelter would take years and cost over $5 billion—a nonstarter given the limited time left in Trump’s current term and the historically low-margin nature of smelting.
“The tariff incents no proper economic action but rather simply adds cost to U.S. manufacturers,” Brackett concluded.
🧭 What Comes Next?
With U.S. copper prices now crashing back to earth, the short-term winners appear to be manufacturers, not miners or infrastructure investors. The reversal also highlights how quickly policy ambiguity can roil commodity markets.
While the administration may have sought to protect American manufacturing, the decision has undercut confidence in long-term resource development—and introduced fresh uncertainty for investors trying to interpret what’s next in the evolving trade strategy.