Copper traders were caught off guard on Wednesday after refined copper was excluded from President Donald Trump’s new tariffs, leaving them with large stockpiles and rapidly falling prices.
On Wednesday, copper futures on New York’s COMEX exchange plunged 20% in one day — the largest intraday drop since the contract began trading in 1988.
The sell-off followed the Trump administration’s decision to exempt refined copper from a sweeping 50% import tariff that takes effect August 1.
Instead, the tariff will only apply to semi-finished copper products like pipes, wires, and sheets, but not to refined copper, the most widely imported form of the metal.
The decision stunned traders who had spent months shipping refined copper into the US in anticipation of the tariff, resulting in COMEX prices surging. Copper is a major industrial metal used in a wide range of applications and sectors, including construction and transportation.
“Prices have been rising this year largely because the market has been front-running the tariff policy and not because the demand picture has been improving or because the supply has actually been tightening,” wrote Ewa Manthey, a commodities strategist at ING.
Copper futures had been trading at a 28% premium on the US exchange compared to the London Metal Exchange — a spread that crashed overnight.
Now, traders face a potentially massive inventory overhang.
“You pay freight to get the metal into the US, you then fund it or you finance it on the CME, you would now break those financing deals to pay freight another time to ship it back, and then potentially sell it at parity,” Michael Widmer, Bank of America’s head of metals research, told Business Insider, adding that some of that metal could be exported, but that there’s also scope for it to stay put for now.
“I can’t quite see this being a good trade,” he said.
Copper stockpiles at COMEX-registered warehouses soared 170% to 253,431 short tons — the highest level in 21 years, per exchange data.
By contrast, inventories at LME facilities have dropped roughly 50% this year, a sign of how much metal was diverted to the US.
“The news on copper tariffs should eventually normalise the relationship between the COMEX market and other global copper markets,” Michael Haigh, managing director and global head of commodities research at Société Générale, told BI.
“There was mention of a 15% tariff on refined copper from 2027 and 30% from 2028, but the markets will ignore that as this is speculation, subject to change,” he added.
“If these are taken seriously, the spread between LME and COMEX may not fully converge as we move closer to that time,” Haigh added.