- The U.S. copper price premium over the global benchmark soared 138% on Tuesday to a record high after U.S. officials announced potential 50% import tariffs on the metal.
- Copper has been flooding into the U.S. from Europe and Asia this year on expectations of higher duties.
- The huge discrepancy in U.S. prices compared to those elsewhere is expected to have a major economic impact, analysts told CNBC.
Following President Donald Trump’s announcement that he would put a 50% tariff on copper imports, the price of copper for American consumers has skyrocketed.
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It implies that already high costs are now even higher in the United States than they are elsewhere, and analysts warned that this would have a negative impact on businesses and the US economy as a whole.
Less than half of the copper used in household items, electronics, manufacturing, housing, and infrastructure projects in the United States is imported. According to experts, Trump’s stated goal of increasing domestic production will require a significant upfront investment and take years to ramp up and decades to completely meet demand.
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Since February, traders have been anticipating a presidential declaration on copper taxes, which has caused significant inventory transfers from Europe and Asia to the United States.
However, given the vagueness in this week’s official messaging, the possibility of negotiating exemptions, and recent instances of the White House making quick policy adjustments, market participants say they are still unsure about the rate and timing. Howard Lutnick, the secretary of commerce, told CNBCThe duties would probably be put into effect on Tuesday at “the end of July, maybe August 1.”
At a record closing of $5.69 a pound, U.S. copper prices closed Tuesday’s session more than 13% higher, the largest one-day rise since 1989. The global benchmark, the London Metal Exchange (LME), saw a mere 0.3% increase in prices.
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It reflects the abnormally high premium that is emerging between copper from the United States and copper from other countries.
Since Trump ordered a probe into copper in February, the difference between U.S. Comex futures and those on the LME has been between $500 and $1,500, as U.S. prices continue to rise despite higher-than-normal inventories. That rate was close to zero in the past and hovered around $150 in 2024.
In contrast, prices on the LME have been comparable to those on the Shanghai Metals Market.
The Comex-LME price premium surged 138% on Tuesday, surpassing $2,600 per tonne, as reported by London-based Benchmark Mineral Intelligence.
According to Benchmark, if the 50% tariff rate is implemented at the beginning of the month, U.S. customers may be spending about $15,000 per metric ton for copper by August, while consumers across the rest of the world may be paying about $10,000.
Benchmark’s lead analyst for copper demand and prices, Daan de Jonge, told CNBC that this enormous disparity will begin to have a significant economic impact.
“On household spending, if you’re buying a new fridge, air conditioner, car, everything is going to get more expensive, and companies could reasonably be expected to pass that on,” he stated. Because of that effect, U.S. consumers may choose to purchase goods made more cheaply overseas, depending on the ultimate baseline tariff rates.
“If we consider public investment, the cost of U.S. debt has increased, the value of the currency has decreased, and now there is a significant rise in the cost of raw materials for infrastructure investments… That should start to have an impact on employment, in my opinion.
Another consequence could be that projects begin to replace copper with less expensive aluminum, which can be utilized in some circumstances but is heavier and requires more maintenance over time, according to de Jonge.
“All of this definitely enters the risk range of demand destruction,” he said.
far-standing mining project permitting delays and the high cost of establishing new facilities, which would depend on the current market dynamics continuing far into the future, are barriers to raising domestic production.
“The question is, can America substitute imported products with domestically-made products, and how quickly?” Senior fellow Peter Chase of the German Marshall Fund stated on Wednesday’s episode of CNBC’s “Squawk Box Europe.” Canada, Mexico, Peru, and Chile are the main suppliers of copper to the United States.
“There’s a reality that has to be dealt with, and the price of copper with a 50% tariff is not going to mean copper production in the U.S. goes through the roof tomorrow.”
The impact would be felt immediately by American firms and consumers, according to Chase, and it will probably affect the country’s aspirations to expand its AI infrastructure.
On Tuesday, however, Citi analysts referred to it as a “watershed moment for the copper market in 2025.”
In a note released on Wednesday, they stated that “imminent flagged tariff implementation should abruptly close the window for further significant U.S.-bound copper shipments (possibly for the rest of 2025),” which would result in a decline in ex-U.S. pricing.
However, considering the recent build-up of U.S. inventory as well as the possibility that major U.S. copper exporters could eventually negotiate a lower rate—another possibility that is looming over the market—they do not anticipate that the Comex-LME premium will reflect a full 50% tax.
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