Copper's strategic role threatened by Trump tariffs
US President Donald Trump's threat to impose 50-percent tariffs on copper imports has roiled the strategic metal on markets.
Copper prices surged almost 17 percent in New York trading to reach a record high of $5.73 per pound on Tuesday.
However, it declined slightly on the London Metal Exchange.
Several analysts say a copper tariff could curb US demand by increasing supply costs, which could put sustained downward pressure on prices outside the United States as the world's largest economy imports less of the metal.
China is the leading producer of refined copper but is also a net importer, limiting its ability to influence markets.
Key uses
Copper demand has exploded in recent years as the world transitions to cleaner energy.
The metal is needed for solar panels, wind turbines and electric-vehicle batteries.
The International Energy Agency forecasts that global copper consumption will increase more than one quarter to 33 million tonnes by 2035, from 26 million in 2023.
"The US, like China, and other major economies, is facing a rapidly-rising demand for electricity -- driven by the electrification of transport" and other needs such as "the explosive growth of AI", Saxo Bank analyst Ole Hansen told AFP.
But it is also used in weapons systems, further underlining its role as a "strategic metal" as governments ramp up spending on defence, noted Jason Schenker, analyst at Prestige Economics.
Repeated tariff threat
Trump in February ordered an internal assessment on whether limited copper imports posed a threat to US national security.
One month later, he promised to implement tariffs on copper, mirroring action he has taken over key metals aluminum and steel.
Trump's initial tariff threats drove up the price of copper as US buyers built up reserves.
By taxing copper, Trump hopes to increase US production of the metal, which currently meets less than half the country's needs.
According to US investment bank Morgan Stanley, net copper imports met 53 percent of US demand in 2024.
Trump's gamble?
Hansen said Trump's threatened copper tariff "makes no sense as it mostly triggers self harm".
The US does not possess the capacity to increase production "to replace imports from what I would call friendly nations like Chile and Peru", he said.
The White House has warned that disruptions to foreign copper production risked "copper availability for US defense and industry needs".
"It makes me wonder if it will be toned down to 25 percent before actually being rolled out," Hansen said, referring to the proposed copper levy.
This is the level that markets had expected before Trump's bombshell announcement this week of a planned 50-percent tariff.
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© Agence France-Presse
Source: AFP
