Donald Trump’s moves to slap tariffs on US copper imports set off a global race for traders to rush cargoes into the country for much of the year. Now that the 50% levy is just weeks away, there are already signs that demand for the metal is drying up from Texas to New Jersey.
Sam Desai is vice president at RM-Metals, a distributor in the Garden State that brings in copper from abroad and sells it to domestic users like appliance makers. US prices had already been trading higher than global benchmarks for most of the year as the market anticipated tariffs. But 50% is much higher than what was expected, and that forced RM-Metals to immediately reduce the amount of copper it ships in, Desai said.
“We made about a 25% reduction” from previous buying levels once the news broke, he said, adding that the company also cancelled pre-existing orders when possible. For the shipments that weren’t cancelled, Desai predicts they will largely end up sitting in stockpiles because customers are “leery” about buying products now.
“The customers don’t want to pay the duty on it — it’s too high,” he said. “We’re going to hold it, and then see what happens in a couple months.”
The tariffs are scheduled to start Aug 1. But for months, American factories had already been forced to pay far more for the metal as New York futures, the domestic benchmark, traded at premiums to London prices. The dislocations have significant impact because copper is a crucial industrial material that finds its way into almost every part of the economy, from housing to telecommunications wires, appliances to computer chips.
In the US, copper buyers now have the option to draw from stockpiles built up from earlier this year, rather than place new orders with distributors like RM-Metals. Inventories in Comex-certified warehouses have swelled to a seven-year high as metals traders rushed in shipments to take advantage of arbitrage opportunities.
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There are also plenty of unknowns when it comes to the tariffs. There is a lack of official details on what products will be covered, whether there will be any exemptions and how they will be enforced.
The uncertainty prompted Aviva Metals, which says it’s the largest US manufacturer and distributer of copper alloys, to put some of its transactions on hold, said Roger Deines, the company’s purchasing manager who’s based in Houston.
“Does it affect copper, does it affect brass, does it affect bronze? Does it affect everything with copper in it, or is it just pure copper or copper cathodes? Really nothing is defined,” Deines said. “We can’t make any real business decisions until it’s all defined.”
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Charles Bareijsza, the chief executive officer at Metals Associates in New Jersey, started working the phones after news broke on the tariff.
“I called our largest customer, and I said to them, ‘Be prepared, there’s going to be some problems with the copper pricing,” he said, referring to the rising cost of imports.
“Unfortunately, we have to pass the increase to the customers, and we have no idea how they’re going to handle it,” Bareijsza said. “For us, it’s a very confusing time.”
Copper is valued in power infrastructure for its conductivity — making it key for both the energy transition and the data centre boom. Trump’s plan for tariffs is a bid to support the development of a more robust domestic supply chain. Now that the US is awash with inventories, that’s providing a buffer for manufacturers and time for the domestic copper industry to ramp up.
But it’s unclear how quickly investments into the US industry will start flowing and how significant they will be. Some industry experts have expressed concern that inflation will rise in the meantime, which would put pressure on the US to backtrack on the levies.
That scenario is adding to the uncertainty for RM-Metals, Desai said.
“The biggest worry customers have is that, let’s say it’s 50% today and tomorrow drops to 40% or 30%, who’s going to cover the cost of the drop?” he said. “Customers are very leery about ordering for the future.”
