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Trump imposes scaled-back copper tariff, US prices plunge

Donald Trump announced on Wednesday that the United States would impose a tariff of 50% on copper pipes, wires, and other copper products. However, the details of this levy were not as comprehensive as expected, and did not include copper input materials like ores, concentrates, and cathodes.

U.S. Comex Copper Futures fell 19.5% following the announcement. This quickly unwinded a premium that had been growing over the London benchmark in recent weeks, as traders assumed U.S. mines would benefit financially from the tariff.

Trump teased his tariff for the first time in early July. He implied that the tariff would be applied to all types red metals, from cathodes made by mines and factories to wire and other products.

In a proclamation issued by the White House however, the administration stated that the tariff would only apply to semi-finished products of copper and other products for which copper is used heavily, beginning on Friday.

Trump's proclamation stated that "Copper imports into the United States are being made in such quantities and in such conditions as to threaten the national security of the United States."

Copper concentrates, mattes cathodes anodes will be excluded from the tariffs. These are some of the most important products produced by copper mines and smelters.

This move will essentially boost Chile and Peru, the two largest copper-mining countries in the world.

Gracelin Baskaran is the director of the Center for Strategic and International Studies' critical minerals security program. She said that the newly announced copper tariffs were far from the universal tariffs about which the markets were worried. It's not as punitive as the markets originally expected.

Trump had ordered an investigation by the U.S. under Section 232 in February. According to the proclamation, Commerce Secretary Howard Lutnick delivered the report to the White House in June.

Trump has said that he could still impose additional tariffs and asked Lutnick for an update of the domestic copper market before June 2026. Trump will then decide whether to impose an import duty of 15% on refined copper starting in 2027 and 30% starting 2028.

The order also calls for measures to support the U.S. copper industry. This includes requiring that 25% of the high-quality scrap produced within the U.S. be sold in the U.S.

Freeport-McMoRan is the biggest copper producer in the United States. It said that it would make a comment once it had thoroughly reviewed Trump's orders.

Codelco in Chile, the largest copper producer in the world, has hailed the decision to exclude cathodes from the copper production process as a positive step for both the company and Chile, the country that is the leading supplier of refined copper for the U.S.

BHP, the company that operates the largest copper mine in the world, and Antofagasta - which exports copper from Chile to America and wants to construct a U.S. mine - did not respond to comments immediately. (Reporting from Daina Beth Solon in Santiago, Ernest Scheyder, in Houston, Divyarajagopal, in Toronto, Pratima Deai, and Polina devitt in London, with additional reporting by Ismail Shakil, in Ottawa. Writing by Ernest Scheyder, editing by Veronica Brown and Marguerita Choy.

(source: Reuters)