Business

Copper Prices Crash After U.S. Tariff Shock: What It Means for the Global Market

Published

2 months ago

July 31, 2025

Chiraag

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In one of the most dramatic commodity shakeups of the year, copper prices plummeted by over 20% after the United States announced it would not include refined copper in its latest round of import tariffs. The decision, made public on 29 July 2025, sent U.S. traders into a panic and sparked a record-breaking price drop on the COMEX futures market.

A Sudden Turn That Nobody Expected

For weeks, global investors had been bracing for a sweeping 50% tariff on all copper imports into the U.S. Everything from raw copper ore to refined cathodes and finished goods was thought to be on the chopping block. The speculation pushed prices skyward as traders stockpiled refined copper, expecting it to become far more valuable.

Then came the twist.

When the White House clarified that refined copper would be exempt and only semi-finished and finished products like copper wires and pipes would be taxed, the market flipped. Copper futures on COMEX fell from a high of $5.59 per pound to $4.41 in just hours, marking one of the sharpest single-day declines in the exchange’s history.

Why Refined Copper Was Spared

The U.S. appears to have made a calculated call to protect its own industries. Refined copper is crucial for American manufacturing, especially in renewable energy, construction, and electronics. Slapping tariffs on it could have driven up costs for domestic firms and risked stalling green infrastructure projects.

By targeting semi-finished imports instead, often produced more cheaply in low-labour-cost countries, the U.S. aimed for protectionism without too much economic blowback.

The Fallout: Winners and Losers

Winners:

American manufacturers now avoid a cost spike on essential copper inputs.
Exporters in Chile, Peru, and the DRC, three of the world’s top refined copper suppliers, keep tariff-free access to the U.S.
Policy makers, who struck a politically safer balance between trade enforcement and local industry support.

Losers:

Speculative traders, who bet big on a refined copper premium and lost billions.
U.S. companies with overstocked copper inventories are now stuck with overpriced material that no longer has a resale advantage.

Global and Local Ripples

The impact wasn’t felt evenly across the globe. On the London Metal Exchange (LME), which has a more internationally diversified trading base, copper only dipped by 0.5%. This highlights how disproportionately U.S. policy affects regional markets.

In South Africa, which is linked to the global copper supply chain via mining, refining, and manufacturing, there could be side effects. Local firms dealing in copper parts or futures contracts may need to reprice deals or adjust hedging strategies. For investors, this is a reminder of how closely political decisions can shake commodity markets, even from halfway across the world.

A Volatile Forecast Ahead

Copper’s nickname, “Dr Copper,” comes from its role as an economic health indicator. But if anything, this week proved it’s also a thermometer for political temperature. As global economies push toward green energy and governments juggle trade protection with industrial progress, expect copper prices to stay unpredictable.

For now, those watching the markets are reminded of a hard truth: it’s not just supply and demand that set the tone. Sometimes, all it takes is one policy pivot to flip the entire game.