The tariffs on refined copper in the United States remain unresolved

There are rumors in the market that the United States plans to impose a 15% tariff on refined copper starting from January 2027, and the rate will rise to 30% in 2028. As soon as this news was released, a large amount of cathode copper and copper concentrates were transported to the United States for storage, in order to avoid the cost of the upcoming additional tariffs. This batch of goods that rushed in ahead of time directly pushed the COMEX copper futures to rise, reaching a new historical high. As long as the tariffs are implemented, the landed cost of imported copper will directly increase.

The logic of futures traders is simple: by completing the import storage before the policy is implemented, they can avoid the subsequent tariffs. A large amount of copper resources worldwide continue to concentrate in the United States, forming a huge inventory. There are reports that the White House has not yet made a final decision, and the market expectations have rapidly reversed. Copper futures fell fast, down over 4%. The government said it is still reviewing different plans, and this has made futures prices swing back and forth.

The domestic copper reserves in the United States are abundant, and the existing resources are sufficient to support mining for nearly three decades. However, the domestic smelting capacity is very limited, with only two refining plants across the country. The import volume of refined copper accounts for half of the domestic demand. After the tariff raises the price of imported copper, the profits of domestic mines and smelting projects will increase. The Trump administration has been promoting several large copper mining projects in the past two years. The Resolution copper mine in Arizona and the Twin Metals project in Minnesota are both in the process of development.

Tariff protection means that the policy provides a price floor for domestic mining projects. However, construction and automotive industries also require a large amount of copper. The increase in raw material costs will compress the profits of manufacturing enterprises. This is also the area that the White House is most concerned about. As the midterm elections approach, the government needs to control the cost pressure on enterprises and residents and cannot allow inflation to rise again.

Copper is not a case of severe overall shortage, rather, the resources have been largely locked up in American warehouses, resulting in a decrease in the available supply in other regions and a tightening of global spot market circulation. This inventory transfer directly affects the cross-market arbitrage opportunities in the COMEX and LME markets. As long as there is the possibility of additional tariffs imposed by the United States, traders will transport copper into the United States. As long as the policies remain unresolved, enterprises will not actively release their inventories back into the international market.

The amount of copper that can be freely circulated in global markets other than the United States has decreased. Before the policies were implemented, there was no motivation for the market to release inventories. The global supply shortage was not caused by mine production cuts, but by the artificial inventory transfer. This scene was played out in 2025. Eventually, the United States only imposed tariffs on semi-finished products such as copper pipes and wires, while exempting refined copper. This experience has led many funds to reduce their positions and manage their risk exposure.

S&P Global calculated that the world will need 50% more copper by 2040 because of AI infrastructure and the defense industry. As a core metal for power transmission, the long-term demand expectation for copper has remained optimistic. The domestic production in the United States has declined in recent years, and since 2015, the domestic refined copper production has decreased by 20%. Long-term, it needs to import from foreign countries. To reduce dependence on foreign countries, in the short term, only tariffs can be relied upon to raise the import prices and attract domestic capital to invest in mine development.

The construction cycle of mines is very long. Even if tariffs are implemented, it is difficult for the short-term additional production to immediately offset the reduction in imports. In the short term, the market is more dominated by policy news. As long as the White House does not issue the final decision, traders will continue to assess the probability of policy implementation. Any slight change in the news will bring short-term fluctuations in the market.