Copper Prices Decline as Trump Proposes Tariffs on Metals

Copper prices dipped lower following a statement from US President Donald Trump regarding potential import tariffs on various metals, including copper, aluminum, and steel. This announcement has heightened concerns about trade wars, contributing to a stronger US dollar.

In a recent speech, Trump indicated that he plans to impose these tariffs as part of an effort to support domestic manufacturing. He also mentioned the possibility of tariffs on computer chips and pharmaceuticals. Reports suggest that Treasury Secretary Scott Bessent has been advocating for universal tariffs starting at 2.5%, increasing over time; however, Trump has expressed a desire for tariffs that are significantly higher than this preliminary figure.

The dollar's strengthening impacts commodities priced in US currency, making them more expensive for buyers in other countries. As a result, prices for aluminum and iron ore have also seen modest declines. Despite the inclination towards tariffs, the responses in the metals market have been relatively muted. This might be attributed to recent sharp losses in the market amid a general risk aversion, driven by a downturn in technology stocks, coupled with the fact that Chinese markets were closed due to the Lunar New Year celebrations.

Should these import tariffs be enacted, Canada could face the most significant impact, as it supplied over 50% of US aluminum imports by value in 2023. Morgan Stanley noted that Canada ranked second, behind Chile, as a copper supplier to the US and was also the top foreign steel provider, followed closely by Mexico and South Korea.

Industrial metal prices remain under pressure as traders consider the implications of a prolonged trade conflict. Such a scenario could slow global economic growth and negatively affect demand for metals. In China, the manufacturing sector saw a contraction in January, following three months of growth, indicating domestic consumers are exercising caution. Additionally, the struggling property sector in China shows little sign of recovery.

As of 10:55 a.m. in Singapore, copper has fallen 0.4%, trading at $9,057.50 per ton on the London Metal Exchange, after experiencing a 2% decline the previous Monday. Aluminum prices decreased by 0.2%, while zinc also saw a drop of 0.4%. Iron ore futures fell by 0.4%, reaching $103.25 per ton in Singapore.

copper, tariffs, trade