Copper Hits $12,000 How Trump Tariffs Created a Global Shortage
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| Photo by Victor on Unsplash |
In a historic market dislocation, copper prices have surged past the psychological barrier of $12,000 a ton for the first time, driven by a chaotic scramble to "front run" US President Donald Trump’s anticipated tariff agenda. While global industrial activity remains tepid particularly in China, which consumes half the world’s supply prices have rallied nearly 37% this year, marking the metal's strongest annual performance since 2009. The primary catalyst is a massive diversion of trade flows traders are aggressively shipping volume to the United States to stockpile metal before new import levies take effect, creating an artificial scarcity for the rest of the world that overrides traditional supply and demand logic.
Beneath the tariff induced panic lies a genuine and severe physical supply crisis. The copper market is teetering on the edge of a major deficit, exacerbated by operational outages at key mines across the Americas, Africa, and Asia. The situation has become so critical that smelters the facilities that process mined ore into usable metal have agreed to a record low processing fee of zero dollars per ton for 2026 contracts, a sign that ore is so scarce they are desperate just to keep their furnaces running. With Deutsche Bank predicting a 3% drop in output from major miners this year and further declines in 2026, the market lacks the buffer to absorb any further shocks.
Looking ahead, the convergence of short term trade wars and long term structural demand has emboldened financial institutions to issue aggressive price targets. Citigroup has outlined a "bull case" scenario where copper could hit $15,000 a ton, fueled by interest rate cuts, a weakening dollar, and the voracious appetite of the AI and renewable energy sectors. While skeptics like Goldman Sachs warn that current prices are driven more by speculative bets on future tightness than today's reality, they still list copper as their top commodity pick, upgrading their 2025 forecast to $11,400. The consensus is clear whether due to tariffs or the energy transition, the era of cheap copper is effectively over.