Arbitrage opens on copper forward curve after White House hints at phased-in copper cathode tariff
Confirmation last week that the Trump administration’s Section 232 tariffs on copper importswill not apply to copper cathode sent the copper market into a state of disarray, causing the arbitrage between the LME/CME cash prices to all-but disappear instantly and the CME price to shed 21%.
The announcement took the market by surprise as the initial Section 232 investigation announcement in February hadidentified US’ reliance on imported copper cathode as a risk to national and economic security. The large spread between the two copper benchmarks reflected broader market expectations for a tariff on refined copper, but this did not transpire.
Nevertheless, a tariff on copper cathode appears to still be on the cards longer term. A statement from the White House last week noted that the Trump administration is still exploring tariffs on refined copper products.
“By June 30, 2026, the Secretary shall provide the President with an update on domestic copper markets, including refining capacity…so that the President may determine whether imposing a phased universal import duty on refined copper of 15 percent starting on January 1, 2027, and 30 percent starting on January 1, 2028…is warranted to ensure that copper imports do not continue to threaten to impair the national security,” the statement reads.
How has the market reacted?
One source commented to Benchmark that the White House statement is only likely to kick uncertainty further down the road, noting they expect volatility in the copper market to persist throughout President Trump’s time in office.
Indeed, the prospect of tariffs on copper cathode has seen an arbitrage emerge between the CME and LME forward curves.
Currently, the arbitrage between the two exchanges sits at around $30/tonne for August 2025, but widens to $660/tonne for July 2028. Whilst this spread is likely to be less volatile than the recent arbitrage in the cash prices, it seems the Trump-influenced CME/LME arbitrage play isn’t dead yet.
Benchmark notes the prospect of a phased-in tariff on US copper cathode imports over the next two-and-a-half years is a more reasoned approach than the tariff structure that had been initially feared.
Building out new mining and smelting capacity is a multi-year process; the mining industry particularly is prone to litigation risk that can result in years-long delays. A 50% tariff on copper cathode would therefore only have served to make copper imports in the US cost more expensive for consumers, with little immediate chance of drastically increasing domestic supply.
The tariff timeline proposed by the White House still leaves little time to drastically increase US smelter capacity, although a gradual ramp up to 30% tariff would cause less of a supply shock than markets initially feared.
To learn more about Benchmark’s copper market coverage fill out the form below.
> 
> 
> 
> 
> 
> 
> 
>