High Voltage: How will copper shape up under Trump’s tariffs?

Trump’s tariffs stir up copper while iron ore stays defensive, but risks rise. Pic: Getty Images
- Trump’s tariffs put copper market in the hot seat
- Iron ore still a defensive play, but risks loom
- How all this could impact investors
Our High Voltage column wraps all the news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, and vanadium.
As global trade tensions rise, copper has found itself in the firing line.
Analysts at Benchmark and Panmure Liberum are tracking the impact of new tariffs on these markets, and what it means for investors.
Copper: the Trump tariff impact
It’s been a rocky ride for copper lately.
The London Metal Exchange saw copper prices drop by 2.9% week-on-week last Friday.
Why? Well, a mix of bad news: tech stock sell-offs, Trump’s tariffs, weak manufacturing in China, and some hawkish remarks from the US Fed.
But things took a turn on Monday, with prices bouncing back after Trump delayed tariffs on Mexico and Canada, and some whispers came out of China about possible concessions to avoid a full-blown trade war.
Now, let’s dig into the impact of those tariffs.
Trump slapped 25% tariffs on imports from Canada and Mexico, and 10% on China.
On the macro level, this has a lot of people worried about inflation, a stronger USD, and slower global growth.
What will it mean for copper?
Analysts at Benchmark put it bluntly: “The most severe impact is expected to stem from tariffs on Canada, which exports nearly 400,000t of copper to the US in raw materials and semi-fabricated products.”
Canada is a huge player in the copper market, providing 15% of US refined copper imports and a massive 82% of US wire rod imports. So, if that copper flow gets choked off, the US could be in trouble.
However, there’s a silver lining, and it comes from the US’ ability to offset this shortfall.
“The lost copper import volume from Canada could be mitigated by a curtailment of refined copper and copper wire rod exports from the US to Mexico, supplemented by imports from tariff-exempt countries like Chile,” Benchmark’s analysts wrote.
In other words, expect some shifts in trade routes, but the copper market could stay stable for now.
As for China, the US doesn’t really import much copper from China (less than 10,000t), but China is a major player in copper scrap.
Last year, the US exported over 300,000t of copper scrap to China.
But let’s be real, Trump’s goal is to boost domestic copper production. And while it might take some time to build new smelting capacity (we’re talking 2-4 years), it could eventually offset some of the imports.
“Many uncertainties still surround the current tariff situation,” said the analysts.
Will copper be hit with its own tariffs? Will Canada, Mexico, and China be subject to different tariff rules under their “critical mineral” status?
And which other countries might be next in line? Only time will tell.
Read later: Stocking stuffers: 10 copper stocks valued under $15m
Iron Ore: a defensive play or risky bet?
Meanwhile, things are a bit different for iron ore.
The US’s latest tariff strategy is starting to look like a repeat of 2018-19’s tariff war, and for iron ore, that could mean some big moves ahead.
Panmure Liberum analysts have pointed out that, with tariffs in play, gold and iron ore are the only two commodities that offer a kind of ‘protection.’
Gold has already soared past $2,800/oz, as investors seek a safe haven. But is iron ore still that China-backed defensive play it was in 2018?
“We think Trump’s 2018-19 tariff strategy = useful playbook for resources investors. There’s price upside in Gold (started) + Iron Ore (possibly),” wrote Panmure’s analysts.
But before you get too excited, there are risks.
Sure, China’s steel-driven economy is still a massive force, and their demand for iron ore isn’t going anywhere anytime soon.
However, analysts are now cautious about overplaying the iron ore bull case. China’s economy is maturing, and the country might not ramp up steel production in the same way it did back in the day.
“China can still drive steel-intensive growth at home and abroad, but is that smart for this ageing economy?” Panmure Liberum asked.
And then there’s the US-China tension.
Trump’s tariffs could boost the price of iron ore if China steps up its steel production to offset tariffs. But that also means more uncertainty.
“The most likely, lower-risk tariff-offsetting strategy China would pursue – if Trump’s tariff war balloons – is to expand exports of goods + services and materials,” Panmure Liberum’s analysts said.
This could lead to even more trade conflicts, but for now, China will do what it can to protect its economy.
In the grand scheme of things, iron ore is still a solid play for investors, but don’t get too carried away.
“Iron ore’s price upside is linked to China’s ability to balance steel production without exacerbating inventory issues.”
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The views, information, or opinions expressed in this article are solely those of the analysts and do not represent the views of Stockhead.
Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.

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