Copper & Aluminum: Tariffs, Volatility, and What Comes Next

The copper and aluminum markets have been highly volatile, driven by tariff concerns. Last week, President Trump proposed a 25% tariff on steel and aluminum imports, sparking speculation that copper could be next. Markets reacted instantly — U.S. copper futures on Comex surged to a record $920 per ton premium over LME prices, while aluminum’s Midwest premium also spiked as traders rushed to secure supplies.

Why Are Prices Moving?

The key driver isn’t demand — it’s fear. The U.S. imports 45% of its copper and relies heavily on foreign aluminum. If tariffs are enforced, import costs will rise, making metals more expensive domestically. Traders are pricing in potential shortages, driving U.S. prices higher than global markets.

The chart above shows how the market reacted to tariffs during President Trump’s first term in 1H’2018: prices spiked sharply in mid-April, reflecting panic-driven buying, supply concerns, and a growing trade war with China. This time is no different, with policy uncertainty driving extreme price swings, even before tariffs take effect.

Who Wins and Who Loses?

U.S. producers like Freeport-McMoRan (copper) and Alcoa (aluminum) may benefit from reduced competition and higher domestic prices. However, manufacturers relying on these metals — such as automakers, construction firms, and electronics companies — could face rising costs, forcing them to raise prices or seek alternatives abroad.

What’s Next?

The coming weeks will be crucial. If tariffs take effect, expect short-term price spikes. If markets overreact, corrections could follow. U.S. trade policies might also shift global commodity flows, reshaping markets unpredictably. Politics is now driving metals prices, and uncertainty remains the only certainty.