Why Copper Prices Could Rise Even Higher Than Their Current Levels

Copper is critical for electronic and electrical products, ranging from car engines and chips in mobile phones. In the last few decades, the United States has produced less of the red metal domestically as it was bringing in low-cost copper from foreign suppliers. This explains why President Donald Trump’s announcement that a 50% tariff would be imposed on all imports of copper as from August 1st was surprising. 

In his statement, he argued that the tariff would stimulate domestic production, adding that it was necessary to reduce reliance on foreign sources as this posed a risk to national security. Prices for the red metal surged shortly after this announcement, increasing by 13% in a day to hit $5.69 a pound. 

Given that America currently imports over 50% of the copper it requires, and it takes about 3 decades from copper discovery to production in the country, economists believe this tax will result in higher prices for many commodities. 

Associate economist Grace Zwemmer explains that this tax would increase costs of production for manufacturers in the automobile, electronic goods, and construction industries, among others. Saxo Bank’s head of commodity strategy Ole Hansen agrees with this take, explaining that tariff-induced price premium may make the red metal and consequently, manufacturing and infrastructure in the country significantly more expensive. 

In 2024, America imported over 90% of its copper from Chile, Peru and Canada. In the same period, it mined roughly 1.1 million tons of the red metal, which covered just below 50% of its consumption. Of the 1.1 million tons produced, over 70% was produced from the state of Arizona. 

To avoid future tariff costs, traders on Wall Street and industrial buyers have shipped significant amounts of the red metal into the country. Estimates from Morgan Stanley show that about 400,000 tons of copper was imported in the first few months of the year. 

While the stockpiles could provide short-term relief to the market, they won’t last forever. Ewa Manthey, ING commodity strategist, posits that unless the country can produce enough copper domestically, it will have to import more copper under the same tariff at some point in the future. 

She explains that rising copper prices could contribute to inflation, pushing up costs for American manufacturers in the absence of a local supply. Additionally, higher prices may lead to undesirable ripple effects across the supply chain. 

It is still unclear whether businesses will absorb the increased costs or transfer them to consumers through higher prices. 

As the energy transition and industrialization gather momentum around the globe, copper exploration companies like Torr Metals Inc. (TSX.V: TMET) could reap big as demand for the red metal surges in the coming years. The U.S. market may not feature so much in the plans of copper suppliers until the tariff situation is resolved. 

NOTE TO INVESTORS: The latest news and updates relating to Torr Metals Inc. (TSX.V: TMET) are available in the company’s newsroom at https://ibn.fm/TMET 

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