Trump Tariffs Trigger Copper Buying Frenzy as Global Supply Tightens

Longtime Investor Alert readers have often seen me say that government policy is a precursor to change. What this means is that when policymakers act—whether through subsidies, sanctions, tariffs or regulations—markets can sometimes respond swiftly and dramatically. We’re seeing that play out right now in real time, especially in the copper market.

The headlines have been dominated by soaring gold prices, and rightly so. On Friday, the metal touched a new all-time high of $3,083 per ounce, driven by geopolitical uncertainty, massive central bank buying and President Donald Trump’s tariff agenda.

But while gold captures the spotlight, copper is quietly stealing the show.

On Wednesday of last week, copper prices in New York hit a record high following reports that the Trump administration may impose 25% tariffs on copper imports in the coming weeks—months ahead of Wall Street’s expectations.

Traders scrambled to front-run the announcement, stockpiling the metal before what Trump is calling “Liberation Day,” the April 2 deadline when many of the new tariffs are expected to take effect.

This rally is being driven by more than just demand increases for wiring or plumbing—though that’s a huge contributor. I believe it’s a full-blown policy-driven price spike, with implications that stretch across the global economy.

Why Copper? Why Now?

Copper isn’t just another base metal—it’s a vital building block of the modern world. The red metal is found in everything: construction, consumer electronics, renewable energy systems, and, perhaps most crucially, the electrical wiring and grid upgrades needed to power our 21st-century lives.

It’s also one of the very few critical minerals that’s found in all clean energy technologies. Whether it’s electric vehicles (EVs), solar panels, wind turbines or battery storage systems, copper is indispensable. That’s why some major trading houses now forecast that copper could exceed $12,000 per metric ton this year. It’s already flirting with $11,000 in London trading.

Supply Shocks

Demand is rising, but what about supply? According to the International Energy Agency (IEA), even under the most optimistic mining forecasts, we’re facing a significant copper supply shortfall by the end of this decade.

The IEA sees a potential gap of 4.5 million metric tons by 2030 in its most aggressive clean energy scenario. Even the base case shows we’ll need 80% more copper by 2040 just to meet the world’s current policy commitments.

New mining projects take years—sometimes decades—to get off the ground. Between permitting delays, environmental reviews and rising capital costs, supply will have a hard time catching up to demand fast enough.

Now, layer in Trump’s America First policy shift. A 25% tariff on copper imports could create short-term scarcity in the U.S., widening the price gap between New York and London. That spread ballooned to over $1,900 per ton, by the way.

The result? A copper-buying frenzy. Mercuria, one of the world’s top commodity traders, estimates that about 500,000 tons of copper are now on their way to the U.S.—nearly eight times the normal monthly import level. That surge could tighten global supply, especially in China, the world’s largest copper consumer, and send prices into uncharted territory.

Tariffs, EVs and Inflation Risk

Some argue that tariffs are inflationary—and they’re right, to a degree. Copper is embedded in thousands of products, from air conditioners to automobiles.

For EVs, the impact is particularly pronounced. According to Bloomberg analysts Steve Man and Peter Lau, a 25% copper tariff could add $275 in raw material costs per electric vehicle, compared to about $68 for gasoline-powered cars. Why the difference? EVs use about four times more copper.

These cost pressures come as global EV sales hit a record 17 million units last year, with December marking the fourth straight month of record volume. U.S. EV sales also hit an all-time high in Q4 2024, with market share jumping to 12.3% in December alone, according to the Alliance for Automotive Innovation, a trade and lobby group.

That’s despite then-President-Elect Trump promising to pull back federal support for EV adoption. The demand is being driven by state-level incentives and falling battery costs, not mandates from Washington.

Still, the tariffs could create sticker shock for some American consumers and contribute to broader inflation concerns. We’ve already seen U.S. consumer confidence fall to its lowest level in over four years, according to the Conference Board. If prices rise and growth slows, stagflation could return to the conversation.

Copper Stocks Catch a Bid

It should come as no surprise that copper producers are catching a strong bid. The Solactive Global Copper Miners Index was up more than 12% year-to-date as of last Tuesday before pulling back. It’s now up around 6%, with the list of best performers occupied by mostly Chinese and Japanese producers, including Nittetsu Mining (up 51.6% year-to-date), Zijin Mining (+27.6%) and JinChuan Group (+23.1%).

Lessons for Investors

Don’t underestimate the power of policy to move markets. Just as gold reacts to geopolitical uncertainty and central bank buying, copper prices are now responding to trade policy.

Even if copper prices retreat in the second half of 2025—as Citi analysts predict, citing potential economic headwinds—the long-term picture remains bullish, I believe. The supply gap is real, and I expect the clean energy buildout to continue accelerating.

On a final note, diversify into producers. We’ve long believed that the best way to play commodities is through the companies that mine, refine and distribute them. Unlike physical commodities, mining stocks offer leverage to rising prices and cash flow.

As always, I recommend staying focused on quality and remembering that the best opportunities often arise when politics and economics collide. Right now, it appears that that collision is happening in the commodities space—and copper is leading the charge.

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Originally Posted March 28, 2025 – Trump Tariffs Trigger Copper Buying Frenzy as Global Supply Tightens

The Conference Board’s Consumer Confidence Index (CCI) is a monthly economic indicator that gauges consumer sentiment about the current and future state of the economy, based on a survey of consumer attitudes and expectations regarding business conditions, employment, and income. 

The Solactive Global Copper Miners Index includes international companies active in exploration, mining and/or refining of copper. The index includes a minimum of 20 and a maximum of 40 members.

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