Analysis-Trump tariff threat built a US copper mountain, but the effects are fading

President Donald Trump's threat of tariffs led to a significant increase in copper stockpiles in the United States, amounting to over 1 million metric tons, without the country spending any public funds. The Comex-approved warehouses in the US held approximately 70% of the world's visible copper stocks, resulting in shortages in other regions and causing a surge in prices.

The tariff threat prompted traders to ship copper to the US, creating a positive arbitrage (price gap) in favor of Comex over the London Metal Exchange (LME). The arbitrage peaked at over $3,000 per ton in July of the previous year, making it profitable to move copper to the US. However, as the prospect of tariffs became less certain, the arbitrage has been gradually collapsing, with the current gap at around $310 per ton.

The US Commerce Department was expected to report on the domestic copper market by June 30, providing the President with the necessary information to decide on a 15% tariff on refined copper imports, which would increase to 30% in 2028. Analysts expect that if the January deadline passes without a decision, the arbitrage will disappear in the short term but may return to current levels, keeping some copper in the US.

The US currently has far more copper than it requires, with Comex, Shanghai Futures Exchange, and LME copper stocks totaling more than 1 million tons. The US imported more than 1.62 million tons of copper last year, an 80% increase from 2024. Since the production in the US was only 1 million tons last year, the country is left with a surplus.

For excess metal to be exported, the prices on the LME and the Shanghai Futures Exchange would need to be significantly higher than on Comex, which would only occur when there are severe shortages outside the United States.