Copper's strategic role threatened by Trump tariffs

US President Donald Trump's menace to enforce 50-percent tariffs connected copper imports has roiled the strategical metallic connected markets.

Copper prices surged astir 17 percent successful New York trading to scope a grounds precocious of $5.73 per lb connected Tuesday.

However, it declined somewhat connected the London Metal Exchange.

Several analysts accidental a copper tariff could curb US request by expanding proviso costs, which could enactment sustained downward unit connected prices extracurricular the United States arsenic the world's largest system imports little of the metal.

China is the starring shaper of refined copper but is besides a nett importer, limiting its quality to power markets.

Key uses

Copper request has exploded successful caller years arsenic the satellite transitions to cleaner energy.

The metallic is needed for star panels, upwind turbines and electric-vehicle batteries.

The International Energy Agency forecasts that planetary copper depletion volition summation much than 1 4th to 33 cardinal tonnes by 2035, from 26 cardinal successful 2023.

"The US, similar China, and different large economies, is facing a rapidly-rising request for energy -- driven by the electrification of transport" and different needs specified arsenic "the explosive maturation of AI", Saxo Bank expert Ole Hansen told AFP.

But it is besides utilized successful weapons systems, further underlining its relation arsenic a "strategic metal" arsenic governments ramp up spending connected defence, noted Jason Schenker, expert astatine Prestige Economics.

Repeated tariff menace

Trump successful February ordered an interior appraisal connected whether constricted copper imports posed a menace to US nationalist security.

One period later, helium promised to instrumentality tariffs connected copper, mirroring enactment helium has taken implicit cardinal metals aluminum and steel.

Trump's archetypal tariff threats drove up the terms of copper arsenic US buyers built up reserves.

By taxing copper, Trump hopes to summation US accumulation of the metal, which presently meets little than fractional the country's needs.

According to US concern slope Morgan Stanley, nett copper imports met 53 percent of US request successful 2024.

Trump's gamble?

Hansen said Trump's threatened copper tariff "makes nary consciousness arsenic it mostly triggers aforesaid harm".

The US does not person the capableness to summation accumulation "to regenerate imports from what I would telephone affable nations similar Chile and Peru", helium said.

The White House has warned that disruptions to overseas copper accumulation risked "copper availability for US defence and industry needs".

"It makes maine wonderment if it volition beryllium toned down to 25 percent earlier really being rolled out," Hansen said, referring to the projected copper levy.

This is the level that markets had expected earlier Trump's bombshell announcement this week of a planned 50-percent tariff.

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Source: AFP