Copper chaos won’t be as profitable as February’s gold conspiracies

The copper price is up 12% since Tuesday. Copper stocks are down 1.5% over the same timeframe. What gives? Or, in this case, taketh away…

Actually, it’s a familiar story. Back in February, it was the gold market that experienced the same thing.

Anticipating tariffs on gold, the price between London and New York began to diverge. Traders could make whopping gains literally flying gold across the Atlantic. If they could get their hands on it in the first place, that is.

But gold dealers, and even the Bank of England, couldn’t keep up with demand. This triggered all sorts of conspiracy theories.

Copper doesn’t quite lend itself to the same sorts of creative narratives. And yet, there’s a lot of confusion about what’s going on. Not to mention how best to profit from it. So, let’s take a closer look…

What is Trump up to?

The US imports half of its refined copper. 90% of that from the rest of the Americas – mostly Chile. Of the copper produced in the US, most comes from Arizona, where a huge new copper mine development has stalled.

Presumably, if Trump is going to onshore a lot of manufacturing and industry, the US will need a lot more copper. But there’s no point making the US less dependent on foreign manufacturing if you just make it more dependent on Chilean copper instead.

So, how do you revive the US economy without increasing import dependency?

“I am announcing a 50% TARIFF on Copper, effective August 1, 2025, after receiving a robust NATIONAL SECURITY ASSESSMENT,” Trump wrote. The basic idea is that he wants more copper supply to come from inside the US.

This triggered all sorts of hilarious criticism. “You can’t move a copper mine to the US,” said many a critic. “The US doesn’t have copper refineries even if it did supply its own copper. It’d have to ship copper ore to China and refined goods back again anyway.”

It all reminds me of the criticism Trump copped when he tariffed penguin colonies in April. Eventually, someone checked the trade balance of the penguin colonies in question. And discovered they manufacture a significant amount of machinery…

What Trump was really doing is preventing tariff dodging. We know lots of heavily tariffed countries assemble their goods in Canada and Mexico to escape the high tariffs. Well, some use penguin colonies on their paperwork for the same effect!

With Trump’s copper tariffs, the logic is just as obvious for anyone willing to look. Trump doesn’t want to move copper mines to the US. He wants companies to build lots of new ones. The same for refineries – that’s why he’s trying to get energy prices down too.

But he has to create the economic incentives for investors to do all this. And his tariffs do just that.

Copper price divergence

You might think there’s only one global price for copper. But you’d be wrong. There are several major copper trading contracts. The New York and Chicago COMEX, London’s LME and the newer Shanghai contract. The prices are not the same.

The US copper price surged 15% on Trump’s announcement of 50% tariffs starting 1 August. But the copper price actually fell in the UK and China. That’s why most ASX copper stocks didn’t budge.

In fact, US copper stocks barely bounced themselves. That’s because they mostly have operations outside the US too.

The copper price spike reflects that, once the tariffs arrive, copper inside the US will be more valuable than copper outside the US. That’s because it won’t have to pay a 50% tariff to cross the US border.

Buying in anticipation of this is what spiked the US copper price. Companies are building up stockpiles to dodge future tariffs.

Just as gold traders were flying bars across the Atlantic months ago, the same is happening to copper now. Although flying is unlikely economical for copper, shipping likely is.

What does this mean for copper in the future?

The gold price soared during the tariff controversy earlier this year. It left behind other asset classes for the first few months of 2025.

It’s natural to presume some sort of causation, not just correlation. But I’m not sure that tariffs were behind gold’s outperformance.

The correlation between the gold price and the spread between London and New York prices isn’t strong. The gold price surge continued long after prices converged.

And so I don’t think we can conclude that Trump’s latest tariff tantrum is necessarily bullish for copper. There are too many other factors going on.

So, what does the tariff mean for copper investors?

The point of Trump’s copper tariff policy is to produce more copper inside the US. That should be bad for the price outside the US. If it works…

But it’s not like copper mine supply responds terribly quickly. So, as for the price of gold, I suspect copper’s price will be driven by entirely different fundamentals in coming months.

To find out what they are, check out this presentation from our mining analyst James Cooper.

If you want to know how you should be profiting from Trump’s latest tariffs, click here.

The first part of the strategy is to invest in the Aussie companies that are already up and running inside the US. This puts them beyond the firewall of US tariffs.

The other option is to invest in the stocks that Trump favours as part of his tariff strategy. You’ll find out what they are here.

Nick Hubble,
Editor, Strategic Intelligence Australia