LME copper slides on Trump 50% tariff threat

What’s driving LME copper price drops? Tariff threats, futures uncertainty and market impact

• LME copper price drops: LME copper price fell 1.81% to $9,616 per tonne on July 7. This was driven by copper futures uncertainty.
• Trump copper tariffs: Proposed 50% tariffs under US copper trade policy could take effect by August 1, unsettling the market.
• Tariff impact on copper: Rising inventories and tariff concerns disrupted price momentum. This caused a shift from higher short-term prices to higher long-term prices.

LME copper price drops 1.81% amid tariff fears and market volatility

The three-month copper price on the London Metal Exchange, dropped more than any other base metal in morning trading on Wednesday July 7.

These were the three-month futures prices at 1:54pm on Wednesday compared with Tuesday’s 5pm close:

Trump’s proposed 50% copper tariff adds pressure to futures market

US trade policy continued to contribute to the downtrend in LME base metals prices.

US President Donald Trump hinted during a cabinet meeting on Tuesday July 8 that the Section 232 investigation into copper could result in 50% tariffs.

“I believe the tariff on copper, we’re going to make it 50%,” Trump said without specifying a timeline.

In an interview later on Tuesday, US Commerce Secretary Howard Lutnick said tariffs on copper would be in place by the end of July or August 1.

Copper market reacts to rising inventories and shifting trade dynamics

LME copper inventories increased 4,625 tonnes day on day, to 107,125 tonnes.

“Spats of fresh copper inflow have capped the upward price momentum at $10,000 per tonne. This has flipped the previous triple digit backwardation into a small contango of $2 per tonne,” said analyst Andy Farida.

“Going forward, we think that Trump tariff announcement on copper was a kneejerk reaction on the LME copper price,” he added.

A trader told Fastmarkets it is difficult for market participants to take positions amid Trump’s latest tariff threat.

“Do we take Trump seriously; do we take him literally? Will he change his mind this afternoon or tomorrow morning? For a market that is import-dependent, is this really going to kick in on August 1?” they said.

“If there is a 50% tariff and there are no exemptions… the US would have to eventually return to the import market,” they added.

Fastmarkets’ analyst James Moore also pointed to market uncertainty. “We’ve had so many other delays and setbacks that there’s still a possibility that things could change,” he said.

The trader said that given the proposed timeline, demand for copper from LME warehouses may drop. This is because traders will not be able to ship metal to the US before tariffs are imposed.

“Practically speaking, if you do have copper already sailing to the US, it’s going to be very tight. If not impossible, to have copper arrive [in the US] before 1 August,” they said. 

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