Copper futures pulled back modestly from record highs after the sharp rally triggered by looming U.S. import tariffs. Prices jumped following President Trump’s announcement on July 9 of a 50% copper import tariff, set to take effect August 1. Traders rushed to import copper ahead of the tariff, pushing futures to record highs.
Market Eases Following Tariff-Driven Rally
The initial spike saw copper prices soar to unprecedented levels, driven by fears of supply disruption and a scramble to front-load shipments. This buying spree drained inventories on the London Metal Exchange (LME) and in Shanghai, while premiums for U.S.-delivered copper spiked.
Now, with the import window closing and physical deliveries peaking, prices have begun to ease. The market appears to be transitioning from panic buying to a more measured stance, as participants reassess demand prospects and supply chain impacts post-tariff.
Structural Risks Remain
While prices have retreated slightly, the broader implications of the tariff are still unfolding. The 50% duty is expected to reshape U.S. copper supply chains, potentially increasing reliance on domestic production while raising costs for manufacturers and downstream industries.
Copper’s strategic importance, particularly in electric vehicles, energy grids, and construction, means the policy could have far-reaching effects on inflation, industrial output, and investment in alternative sourcing.
The Road Ahead
With the August 1 tariff implementation date just days away, attention now turns to how U.S. buyers will adapt in the absence of tariff-free imports. Market participants expect continued volatility, with elevated premiums and potential disruptions to delivery schedules.
Although the initial shock has subsided, the copper market remains on edge. The recent price reversal may offer a temporary reprieve, but the real test will come once the tariffs are in place.
Technical Outlook
Looking at the daily copper futures chart, a shooting star pattern formed on Thursday July 24th. RSI crossing from above to below the overbought level of 70 would strengthen the bearish scenario. The prior high from March 26 and the monthly pivot stand out as possible support levels to watch.