Copper Prices Dip amid Trump's Proposed Metal Tariffs
Copper prices declined after U.S. President Donald Trump announced plans to impose import tariffs on the metal, aluminum, and steel. The move has raised concerns about trade wars and boosted the dollar.
Trump's announcement, along with threats of levies on computer chips and pharmaceuticals, aims to bolster domestic manufacturing. According to unnamed sources cited by the Financial Times, Treasury Secretary Scott Bessent favors universal tariffs on U.S. imports starting at 2.5% and gradually increasing. Trump has since indicated he desires higher tariffs.
The strengthening dollar has made commodities priced in the currency more expensive for buyers. As a result, aluminum and iron ore prices have also witnessed modest declines. The muted market reaction to the tariff threats may be attributed to recent sell-offs in the wake of technology stock losses and the Lunar New Year holiday in China.
Canada is projected to face the most significant impact from metal tariffs. In 2023, over half of the U.S.'s aluminum imports (by value) originated from its northern neighbor, according to Morgan Stanley. Canada also ranked second behind Chile as a copper supplier and first among foreign steel suppliers to the U.S., followed by Mexico and South Korea.
Industrial metals have faced pressure due to concerns about a prolonged trade conflict, which could hamper global growth and weaken demand. In China, factory activity contracted in January after an expansionary period, indicating caution among domestic consumers. Additionally, the country's property sector continues to face challenges without any signs of a sustained recovery.
As of 12:24 p.m. in Singapore, copper prices on the London Metal Exchange had declined by 0.5% to $9,049.50 per ton, following a 2% decrease on Monday. Aluminum prices fell by 0.4%, while zinc witnessed a 0.9% dip. Iron ore futures in Singapore dropped by 0.4% to $103.20 per ton.