Introduction of 50% tariffs on US copper imports will widen price gap between global exchanges

Yesterday's announcement by Donald Trump about imposing 50% tariffs on copper imports to the US sparked a strong market reaction. COMEX copper futures surged by 12%, reaching a record high. Meanwhile, the asset's price on trading platforms in Shanghai and London declined.

Experts at Goldman Sachs are confident that the high tariff rate serves as a negotiating tool. The bank suggests that Trump will likely make concessions soon and introduce exemptions. However, the threat of his intentions being fully implemented will still drive an increased flow of copper into the United States over the coming weeks. Goldman Sachs analysts have kept their year-end copper price forecast unchanged at $9,700.

Citi's base scenario suggests the introduction of 50% tariffs on copper with no concessions or exemptions. A sharp influx of the metal into the US could fully meet domestic demand for copper.

BMI expects the recent announcement to exert downward pressure on the metal’s prices in Shanghai. However, they are projected to recover later. The company also anticipates that the price gap between COMEX and LME will widen, preventing the metal from experiencing an excessive decline.