Copper Markets Plunge 20% After Dramatic Trump Tariff Reversal
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A sudden shift in U.S. trade policy triggered the largest daily decline in copper futures since 1968, erasing billions in market value and raising concerns about the reliability of economic policymaking.
In one of the most dramatic reversals copper markets have seen in decades, U.S. copper futures plunged nearly 20% late Wednesday after President Trump announced a reworked tariff policy – imposing a 50% levy on copper products but notably not on the raw material itself. If the drop holds, it would mark the largest daily decline in copper futures since records began in 1968, eclipsing even the fallout from “Black Monday” in 1987.
From Record Highs to Rapid Collapse
Earlier this month, copper prices had soared to record highs in the U.S., fueled by the initial announcement of a proposed 50% tariff on all copper imports. This initial proposal sparked a wave of panic buying and aggressive stockpiling, driving prices significantly above global benchmarks. Traders rushed to secure supplies, overwhelming warehouses from Baltimore to Detroit.
However, this surge was built on what one analyst described as “shaky ground,” characterizing it as another example of a policy shift typical of the previous administration.
Policy Pivot Reshapes Market Expectations
The revised policy, released just days before the August 1 implementation deadline, significantly narrowed the scope of the original plan. Instead of targeting copper in its raw or semi-processed forms – such as concentrate, cathodes, or scrap – the White House focused the tariff on finished products like wires, pipes, and tubing. Crucially, even then, the tariff applies only to the copper content of these goods, not their total value.
This adjustment effectively realigns domestic copper prices with global benchmarks, currently around $4.50 a pound, and eliminates the artificial premium created by tariff speculation.
Winners and Losers Emerge
The policy change offers some insulation to U.S. manufacturers who rely on copper-intensive goods – including those in the electronics, plumbing, and construction sectors. However, it leaves producers and miners vulnerable. Shares of Freeport-McMoRan dropped 9.5%, while Ivanhoe Electric lost 17% as investor expectations for a domestic mining boom evaporated.
According to a company release, those who had anticipated a regulatory breakthrough alongside tariff support are now facing a harsh market reality: the tariffs are temporary, inconsistent, and offer little incentive for long-term investment in production infrastructure.
The Risks of “Policy by Headline”
This episode underscores a recurring pattern in the previous administration’s economic approach – what critics termed “policy by headline.” The initial 50% tariff pledge ignited a speculative rally, but the subsequent lack of clarity and rapid reversal left markets reeling. Even seasoned analysts cautioned against overinterpreting the announcements.
As Bernstein’s Bob Brackett noted, the U.S. is heavily reliant on imported copper, possesses only two active smelters, and building new capacity would require billions of dollars and years of effort. In this case, tariffs simply added costs without providing a viable, sustainable economic path forward.
A Self-Inflicted Market Shock
Ultimately, this was a self-made crisis. The initial tariff rhetoric drove prices higher without addressing the fundamental weaknesses in U.S. copper supply chains. Then, with a single revision, that artificial premium vanished, leaving traders, producers, and investors exposed. The biggest impact of the tariff may not be on copper imports themselves, but on confidence in policymaking.
Tariffs Without Strategy Are Just Noise
The copper collapse serves as a cautionary tale. Markets demand predictability. When policy shifts are driven more by press conferences than by careful planning, volatility becomes the norm. While short-term reactions generate headlines, it’s the long-term investment signals that truly shape economic outcomes. Until trade policy is rooted in strategy – not surprise – markets will remain vulnerable to every twist of the microphone.
