New Energy Weekly – Tariffs Wreak Havoc
How the Threat of U.S. Tariffs Wreak Havoc on Global Metal Prices
Copper continues to perform incredibly well. The metal of electrification rose over $1.00 per pound, 25% so far this year. This is an important story for Mangrove Investor. We believe that copper will be the metal of the next century.
The copper discoveries of the next few years will create generational wealth. It’s that important. But it is politics, not fundamentals, driving the current rally.
February 25, 2025: Trump signs an executive order directing the Commerce Department to evaluate whether tariffs on imported copper are necessary for national security, citing its significance in U.S. defense, infrastructure, and emerging technologies1.
According to Perplexity.ai, here is the timeline of copper tariffs:
February 2025: Trump grants Commerce Department officials 270 days to submit their findings on potential copper tariffs.
March 26, 2025: Reports emerge that the copper tariff investigation is progressing rapidly and may conclude much earlier than anticipated. Sources indicate that the process could be finalized within weeks, months ahead of the initial deadline.
Current status: As of March 28, 2025, no copper tariffs have been officially implemented. However, speculation about imminent tariffs has caused copper futures on the Comex exchange to surge to a record high of $5.29 per pound.
Trump has suggested a potential 25% tariff on all copper imports, which could significantly disrupt global markets for this essential metal. While the tariffs are not yet in effect, analysts from Goldman Sachs and Citigroup predict that the U.S. will impose a 25% copper tariff by the end of the year.
Interestingly, copper mining stocks, as tracked by Global X Copper Miners ETF, have not performed quite as well:
That’s important to understand. Because it tells us that the market doesn’t believe the price movements. And a recent article explains why.
According to a report in Mining Journal, banking giant BNP Parabas predicted a price collapse later this year. From the essay:
BNP’s senior commodities strategist David Wilson said the bank expects the imposition of tariffs to end the current copper pricing dislocation, enabling the market to focus on the negative demand impact of US trade policies.
“We expect prices to collapse in Q2 2025,” Wilson said in a note.
The bank also revised down its forecast for global copper consumption, which is anticipated to increase by 2.3% this year versus 3.1% previously. It also projects a supply surplus of 460,000 tonnes, a sharp rise from an earlier forecast of 124,000 tonnes.
The summary is that the threat of U.S. tariffs caused an artificial surge in demand. Traders, fabricators, and consumers scrambled to get copper into the U.S. ahead of the new taxes. However, the administration continues to dance around when these tariffs are going to hit.
The result, according to BNP Parabas, will be lower global growth:
“It is simple economics; less global trade means less global growth,” Wilson wrote. “This is the key factor that prompts us to up our copper market surplus expectation.”
Not everyone agrees with this outlook, but it is a simple conclusion. And in our experience, simple explanations are usually correct.
The takeaway here is that this is not a great time to buy copper stocks. They should be cheaper when prices come down.
For the Good,
The Mangrove Investor Team
