U.S. copper prices surge on Trump’s threat of 50% tariff

The stock market has brushed off President Donald Trump’s latest volley of tariffs, but a comment he made Tuesday has jolted the market for copper, the base metal with a wide variety of applications, including in homes, cars, devices, the power grid and data centers.

The price of U.S. copper futures hit a record high Tuesday after Trump told reporters at the White House that a 50% tariff on the metal was imminent. Later that day, Commerce Secretary Howard Lutnick said on CNBC that the copper tariff would come into effect in late July or early August.

The tariff rate was higher than many analysts were anticipating. This was reflected in a surge in price for copper in New York, far above the price for contracts traded in London, a global hub, suggesting that American importers are set to pay more for shipments of the metal in the months ahead. U.S. prices have detached from global averages in recent months, as American buyers front-loaded purchases to get ahead of potential tariffs.

The Trump administration began an inquiry into copper in February, investigating whether foreign production and imports of the metal posed risks to America’s economic and national security. Similar investigations have already resulted in tariffs on steel, aluminum and cars. Other inquiries are underway for pharmaceuticals, semiconductors and lumber, among other products. Sector-specific tariffs are separate from the “reciprocal” tariffs Trump has imposed at the country level, set for Aug. 1.

It was not immediately clear how the new tariffs, if imposed, could play into efforts to bring three new copper-nickel mines to northeastern Minnesota.

Trump pledged to jumpstart mining in that part of the state during his campaign.

One mine, the Twin Metals Mine between Ely and Babbitt, would produce 20,000 tons of ore a day, including copper, nickel, cobalt and platinum group metals. A second, the NorthMet, would be an open-pit mine near Babbitt, and the mine plan calls for producing 32,000 tons of ore, mostly copper, each day. The third, the Talon Metals’ Tamarack Mine, would be an underground project in Aitkin County, a part of the state without any large-scale mining. It would extract 3,300 tons a day of nickel, copper and platinum group metals, according to proposals.

The mines would provide hundreds of jobs and provide copper, a metal in high demand for its ability to conduct electricity, and nickel, a metal often used in electric vehicle batteries.

Environmentalists have been pushing back with worries about how mining could impact areas like the Boundary Waters Canoe Area Wilderness, which is near two of the proposed mines.

The United States produces a lot of copper, but still imports roughly 40% of what it consumes, primarily from Chile. Demand for copper tends to persist in the face of swings, so “producers may pass most of the tariff burden onto U.S. consumers,” analysts at the bank BTG Pactual wrote in a note. “This suggests that the proposed measure is more likely to translate into higher consumer and producer prices in the U.S., with a consequent negative impact on economic output.”

To shore up supplies of the metal, beginning in 2022 the Biden administration and the European Union put nearly $1 billion into an enormous infrastructure project in copper-rich Africa, where China has a huge presence in the sector.

In the United States, spikes in copper prices often lead to increased crime as scrap-metal thieves raid streetlights, train yards and plumbing lines to capitalize on demand.

The Minnesota Star Tribune’s Tim Harlow contributed.