The United States will impose a 50% tariff on imported copper this weekend, and Chile is actively seeking an exemption.

The United States plans to officially impose tariffs of up to 50% on copper imports this weekend, but the direction of related policies still remains uncertain. With Chile, the United States' largest copper supplier, actively seeking exemptions, and the concept of a "metal alliance" between the US and Europe gaining traction, the future of copper prices and the global metal trade landscape may undergo significant changes. The announcement by the Trump administration on July 8th of the imminent implementation of copper tariffs triggered a strong market reaction, with copper prices rising by 13% on that day, closing at $5.6855 per pound, reaching a new high since 1968. On July 23rd, copper prices further rose to a new high of $5.82 per pound, despite experiencing a three-day correction afterwards, and rebounding slightly to $5.63 per pound by Tuesday. Copper is widely used in various sectors such as construction and electronics, and its price fluctuations are closely related to inflation, leading to market concerns about cost pass-through and price pressures. Natalie Scott-Gray, senior metals demand analyst at StoneX, pointed out that there is a general sense of "tariff fatigue" in the market and expectations for the possibility of "national exemptions." She believes that if the US announces exemptions for certain countries, such as Chile, on August 1st when the copper tariffs come into effect, it may quickly narrow the arbitrage opportunities between COMEX and the London Metal Exchange (LME). Chile's Minister of Finance, Mario Marcel, has already stated that they are working towards exemptions. Analysts believe that Chile is being "specially treated" not only because it dominates copper supply to the US but also due to the trade surplus between the US and Chile. Currently, the price of the COMEX September copper contract is around $5.63 per pound, while the LME three-month copper price, when converted, is only $4.44 per pound, significantly widening the arbitrage opportunities. If there are no national exemptions and the tariffs take full effect, StoneX predicts that the arbitrage spread will further expand, and US copper prices will remain high in the medium term. With the US relying on copper imports up to 44%, any supply disruptions could further push up prices. Meanwhile, LME copper prices may face downward pressure as high tariffs may weaken the attractiveness of the US market, leading to global stocks flowing back into LME warehouses, widening the futures price curve further. In anticipation of the tariffs, US copper importers have taken action. Morgan Stanley pointed out that US copper imports surged by 129% year-on-year in the first half of this year, leading to a significant increase in inventories. StoneX also stated that some copper cargoes are already anchored off US waters, waiting for the best time to enter. Gregory Shearer, commodities head at Morgan Stanley, said that the "pre-purchasing" by the US and other countries has exacerbated the global supply imbalance. Although global copper supply remains tight, inventory distribution is currently uneven. He expects the effects of this "pre-overdraft" to gradually reverse by the second half of 2025, putting pressure on copper prices in the near term. He also pointed out that as copper flows reallocate to other regions, LME stocks will be replenished, widening arbitrage opportunities and exerting continuous pressure on LME copper prices. Morgan Stanley's global research department expects that as tariff policies become clearer, the arbitrage gap between COMEX and LME copper prices will expand to around 50%, meaning that COMEX prices will be higher while LME prices fall. At the same time, Europe is also seeking exemptions from US steel, aluminum, and copper tariffs. European Union Trade Commissioner Maros Sefcovic recently stated that the US-EU trade agreement is moving towards establishing a "metal alliance," intending to build a "common protection circle" through a mechanism of "historical quotas + preferential treatment." According to StoneX, under the framework of the "metal alliance," EU steel and aluminum exports will receive certain duty-free quotas, with a 50% high tariff applied beyond the quotas. This quota system has not been finalized yet. As for copper and lumber, the US is still evaluating the conclusions of the Section 232 investigation and is expected to impose tariffs not exceeding 15%. John Caruso, senior strategist at RJO Futures, pointed out that even without tariffs, copper is still in a long-term bull market cycle. "We are in the midst of the boom in AI data center expansion, with individual data centers requiring up to 2,177 tons of copper," he said, adding that the increased demand for copper brought about by global grid upgrades, electrification, and AI technology proliferation is "almost infinite," and the mismatch between supply and demand will persist in the long term.