On Tuesday 8thJuly, President Donald Trump announced the US intends to place a 50% tariff on copper imports into the country. Despite this proclamation, there has yet to be an official written announcement or many additional details.

Sources that spoke to Benchmark in the wake of the announcement noted surprise at the size of the tariff, which many had expected to be closer to 25%.

The 50% tariff is set to come into force by late July or early August, a statement from US secretary of commerce Howard Lutnick stated. There remain, however, important details that require further clarification. Such as whether cathodes, semi-products, scrap, and other parts of the copper market will be included under the umbrella definition of “copper.”

This uncertainty was highlighted by Maximo Pacheco, the chairman of Chile’s CODELCO, who told Reuters there was a lack of clarity on what products and nations would be affected by the tariff. Under previous commodity tariffs some nations have been granted exemptions. For example, the UK has a part exemption from steel tariffs.

“As usual [with Trump], there are still some big unknowns,” said one European copper smelter.

Exchange prices move sharply

Despite the uncertainty, the market has responded quickly to President Trump’s remarks. The CME/LME arbitrage widened on Wednesday morning – standing at $2,820, up 143% since Monday.

This arbitrage doesn’t, however, reflect a 50% delta to the LME price – showing the market is still pricing in some uncertainty. Rather, the current arbitrage represents around 30% of the LME price, showing there is some expectation the tariff may not be 50% or may have some exemptions.

“The market is still saying that the tariff won’t be 50%,” said one miner noting that uncertainty continued despite Trumps statement.

The COMEX copper price is a duty inclusive price, unlike the LME which a duty-free price. This means that any tariff should be directly reflected in the COMEX price, explaining the 13% uptick in the COMEX price on Tuesday to an all-time high.

US copper imports to slow?

One of the main affects of the uncertainty surrounding tariffs – prior to yesterday’s announcement – was huge flows of copper into the US; in an effort to front-load supply and take advantage of the broad LME-CME arbitrage.

These deliveries are now likely to slow, with various sources telling Benchmark they don’t believe material will be able to be shipped to the US in time to avoid tariffs on arrival. Shipments from Chile can take upwards of 20 days and could well arrive after the tariff is implemented. EU sources also noted that shipments from Europe would not likely arrive in time to meet the deadline.

Meanwhile, some sources noted that Mexican and Canadian copper may still be able to make it to the US in time. Others noted that some participants may take a risk on shipments already being loaded, but that it’s likely US imports of copper would begin to slow.

As a result of front-loading, the US has imported an enormous amount of excess copper over the last few months. In the first four months of 2025, the US imported 461 kt of copper, 232kt and 148kt more than the same periods in 2024 and 2023 respectively.

LME copper falls on tariff news

This expectation of slowing imports has caused the LME price and forward curve to move significantly. The LME contract was in a cash-to-three month backwardation before the announcement, which has now fallen significantly.

The cash-to-three month was flat on Wednesday morning, from an $80 backwardation on Monday. The LME cash price also fell significantly, down to $9,579.5 – a drop of 2.7% since Tuesday.

Multiple market sources noted the declining backwardation implied some participants did not think it would be possible to book and ship copper to the US before the tariff enters force – removing support for the cash LME price, which had been buoyed by the scramble to front-load units into the US ahead of tariffs.

Imports to the US are likely to be impacted significantly, with sources in the rest of the world telling benchmark they expect looser market conditions globally and lower premiums following the announcement.

“The European market won’t be as tight after summer,” said one European copper smelter.

“I think starting in September European premiums will start to go down,” said the European trader source.

Sources skeptical of positive impacts

A 50% tariff will have significant ramifications for the cost of copper in the US, as there is insufficient domestic production to cover demand. Designed ostensibly to favour domestic supply over foreign sources, the short-term effect of the tariff will be to drive up prices for US consumers of refined copper, who will need to pay a 50% premium to the global market to import material.

In 2024, the US exported 843 kt of copper contained in scrap and concentrates but imported a net 720 kt of cathodes. This was due to the US having insufficient smelter capacity to process enough copper to support its needs.

The US has some idled smelter capacity, namely the ASARCO Hayden smelter, however even if re-opened the US would still need to import refined copper. Were the smelter to be restarted, the ramp up would take a significant period of time due to having been closed for several years.

Sources told Benchmark that companies are unlikely to make multi-year investment decisions based on what could be a transitory tariff.

“You can’t set a ten-year investment plan on the basis of tariffs,” said the European trader source. This view reflects statements made in the industry before yesterdays news, including by noted BHP CEO Mike Henry.

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