Copper Futures Surge as Traders Gauge Upcoming U.S. Tariff Risk

Copper futures have risen for more than a year, reaching a record premium of almost $6.90 per pound on the U.S. COMEX market. The price gap between COMEX and the London Metal Exchange (LME) has traditionally reflected short-term supply shocks—such as Chinese demand fluctuations or South American mine disruptions—and has been used by traders, banks, hedge funds, producers and consumers to hedge risk and capture arbitrage opportunities.

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The U.S. Commerce Department has recommended a phased universal tariff on refined copper: 15 % beginning in 2027, rising to 30 % in 2028. This follows an existing 50 % levy on imports of semi-finished copper products and other copper-based goods. The proposal is part of a Section 232 investigation into national-security concerns, and the White House has not yet issued a final decision.

Copper Spread Signals U.S. Tariff Expectations

Societe Generale analysts say the prospect of fresh Section 232 duties has altered the role of the COMEX-LME spread, turning it into a real-time gauge of tariff expectations. Their model translates the current premium into a 14.6 % implied probability that the 15 % tariff will be imposed in 2027, and a 37 % probability of the 30 % duty taking effect in 2028.

Copper Spread Signals U.S. Tariff Expectations

U.S. copper imports rose to more than 200,000 metric tons in July, the highest level in twelve years, according to trade data cited by analysts. ING’s Ewa Manthey notes that the widening premium signals heightened perceived tariff risk, drawing additional metal into the United States. She adds that tight mine supply and ongoing competition between the U.S. and China continue to support prices, while tariff uncertainty is likely to keep volatility elevated.

Copper Spread Signals U.S. Tariff Expectations CNBC

If the phased tariffs are enacted, the cost of refined copper for U.S. manufacturers could increase substantially, potentially reshaping supply chains and prompting further price adjustments in both futures markets. Until the White House issues a definitive ruling, the COMEX-LME spread will remain a key barometer for investors monitoring policy risk.

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