Critical moment! Trump's "half-turn" policy causes copper prices to plummet, and arbitrage dreams are instantly shattered

A single order instantly rewrites the global copper market landscape.

In the early morning of July 31st Taiwan time, the White House suddenly announced a new tariff arrangement, imposing a 50% duty on copper semi-finished products starting August 1st, while fully exempting refined copper and cathode copper. This rapid policy shift directly triggered intense market volatility. New York copper futures plummeted, with a single-day drop approaching 22%, marking the largest single-day decline in history. The premium that had surged to high levels just weeks earlier evaporated within hours, catching Wall Street traders off guard with this dramatic change.

From Rally to Collapse: The Power of Policy Reversal

As early as this month when Trump hinted at implementing a “comprehensive copper tariff,” global traders began frantic stockpiling, shipping large quantities of copper to the U.S. market. This rush drove the premium of New York copper over the London Metal Exchange benchmark price past the $3,000 per ton mark, immersing the market in a profit-fueled frenzy.

However, the White House’s latest tariff announcement only targets semi-finished products, with refined copper and raw ore fully exempted. This policy reversal directly undermines the long-constructed arbitrage mechanisms that traders had relied on.

Michael Haigh, head of commodities at Société Générale, summed up the market sentiment: “Excluding refined copper, the entire trading logic collapses.”

At the time of the event, September NY copper futures fell to $4.3475 per pound (about $9,623 per ton) during Asian trading hours, with a single-day decline of up to 22%. Even more shocking, the premium of copper relative to the London exchange plummeted by 97% from its high, leaving only $104. Traders who rushed to stockpile copper before the tariff announcement faced severe backlash, as massive inventories at U.S. ports suddenly became an unmanageable burden.

Industry Power Play: The White House’s Strategic Choice

Delving into the policy behind the turn, this shift actually reflects the power dynamics within U.S. domestic industries. The U.S. domestic refined copper capacity is far from sufficient. Under strong lobbying from leading copper companies, the White House ultimately chose compromise. Juan Ignacio Díaz, president of the International Copper Association, defended this decision, claiming it strikes a balance between protecting domestic industries and ensuring supply chain security.

But the market has already paid a heavy price. Anant Jatia, chief investment officer at Greenland Investment Management, pointed out that in the short term, London copper prices might show a relative premium over New York prices due to the oversupply of U.S. inventories; long-term effects depend on how quickly inventories are absorbed and whether downstream products face new tariff shocks.

Tom Price, analyst at Panmure Liberum, remains relatively optimistic, believing that when New York copper prices fall back to $4.50 per pound, they are essentially returning to pre-tariff levels. The Shanghai metals trading community bluntly states: “The months-long tariff fears have finally subsided, and the market is returning to normal.”

Risks Remain Unresolved: Future Uncertainty

However, investors should not be overly optimistic. The refined copper tariffs announced by the White House are only a “pause,” not a permanent cancellation. The Commerce Department has been explicitly instructed to complete an assessment report by June 2026, after which the President will decide whether to initiate a phased tariff increase: a 15% rate in 2027, rising further to 30% in 2028. This Damocles sword hanging over the global copper supply chain will not disappear in the short term.

This sudden policy reversal serves as a wake-up call to the vulnerability of metal markets. Facing the ever-changing trade decisions of the U.S. government, hundreds of billions of dollars in capital could evaporate at any moment. Although the U.S. has reached tariff agreements with several countries, the ongoing trade negotiations between the world’s two largest economies, the U.S. and China, remain tense and unpredictable, potentially igniting the next wave of market volatility. For those involved in commodity investments, maintaining heightened vigilance and readiness to respond to policy changes has become an unavoidable task.