U.S. copper price spike could have severe economic consequences
Close the copper windings of the electrical engineer in an electrical engineering factory.
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Copper cost for our buyers, President Donald Trump said that he would apply 50% tariff to metal imports.
This means that high prices are higher in the United States than other places and analysts. As a result, businesses and wider US economy were warned about a coup.
USA IMPORT under half Copper used in products ranging from machinery, electronics and household goods to housing and infrastructure projects. The ambition of Trump is to increase internal production, but experts say that with a large preliminary investment cost, it will take years to increase for years to fully meet the demand and will take decades of years.
Since February, traders have been prepared for a presidential announcement about copper duties and led to major changes in stocks from Europe and Asia and the United States.
However, the ratio and timing were uncertain – and market participants say that this week, the uncertainty in official messaging, potential chamber for negotiations and the latest examples of rapid policy changes from the White House, they say that they stay. Trade Secretary Howard Lutnick said on Tuesday, CNBC, probably the tasks will probably be implemented on “late July, maybe August 1”.
US Copper Prices ended over 13% to Tuesday’s session-$ 5.69 per sharpest one-day earning-pound since 1989. Global comparison at the London Metal Exchange (LME) increased only 0.3%.
We are a reflection of the unusual wide premium that develops elsewhere between copper and metal.
US prices, despite larger stocks as usual, US comex futures Since Trump announced an investigation to Bakir in February, people on LME fluctuated between $ 500 and $ 1,500. Historically, this rate was close to zero and in 2024 at $ 150.
Meanwhile, prices in the Shanghai Metals market are similar to those in LME.
According to the London-based agency Benchmark Mineral Interence, Cotex-LME Price Premium increased by 138%on Tuesday and the tone increased over $ 2,600.
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Until August, Benchmark pays about $ 10,000, assuming that US consumers can pay about $ 15,000 per metric tone for copper, and the rest of the world has entered into force at the beginning of the month.
In his statement to CNBC, this great inconsistency will begin to have a major economic impact.
“If you buy a new refrigerator, air conditioning, cars in home expenditures, everything will be more expensive and companies can be expected to pass on a reasonable way.” He said. Depending on the final basic tariff rates, US consumers may prefer to buy cheaper goods abroad due to this effect.
“If we look at the public investment, the US debt is more expensive, the dollar is decreasing and now you get a large raw material cost for infrastructure investments … I would expect it to start to show employment effects.”
De Jonge may be that projects start to change copper for cheaper aluminum, which can be used as a spare in some cases.
“All this is definitely at the risk of demand destruction.”
‘Havata moment’
The obstacles of increasing domestic production include the long -standing permission delays for mining projects and the great cost of opening new facilities that will withstand the current market dynamics that have been going on for a long time.
“The question is, can America change imported products with domestic products and how fast?” The German Marshall Fund Senior Member Peter Chase said about CNBC’s “Squawk Box Europe” on Wednesday. The main sources of the US Copper are Chile, Canada, Peru and Mexico.
He said: “There is a reality to be considered and the price of copper with 50% tariff will not mean that copper production in the USA will pass through the roof tomorrow.”
Chase said that US consumers and businesses will immediately feel an impact and probably hit the US plans to create AI infrastructure.
Meanwhile, analysts in Citi called “Havza Moment for the Copper Market in 2025” on Tuesday.
In the Wednesday note, saying that this would lead to a withdrawal in the old US pricing, “the close marked tariff application should suddenly close the window for more US -related copper shipments (probably for the rest of 2025).”
However, considering both the last US inventory accumulation and the possibility of negotiating a lower ratio at the end of the US copper exporters, they do not expect the Cotex-LME premium to reflect a full 50% tariff-another possibility hanging in the market.
