Copper prices have surged toward an all-time high due to fears of potential tariffs from President Trump and China’s economic stimulus initiatives.
The copper market has experienced a strong rally, with the metal’s price rising by 27% this year, driven by concerns about tariffs and additional stimulus measures from China announced last week. Last Thursday, copper futures at COMEX peaked at $5.15 per pound, nearing a record high from May 2024. However, prices slightly retreated to $5.12 per pound in Monday’s Asian session.
The growing demand for copper is linked to its vital role in various sectors, particularly the electrification of battery-powered vehicles, the boom in artificial intelligence (AI), and the global transition to renewable energy. Despite its increasing importance, copper faces supply constraints due to a lack of investment in mining and limited refining capacity. These supply challenges, coupled with Trump’s tariff threats and China’s renewed stimulus measures, have combined with the weakening US dollar to push prices higher.
“A part of the copper story is China’s stimulus and recovery, the other part is tariffs. We could be seeing a boost in demand at a time when higher prices could restrict the supply side. The weaker dollar (naturally) helps a bit as well,” said Kyle Rodda, a senior market analyst at Capital.com.
Trump’s executive order last month, which aims to investigate copper imports to address national security and economic stability concerns, has further fueled the rise in prices. “The United States faces significant vulnerabilities in the copper supply chain, with increasing reliance on foreign sources for mined, smelted, and refined copper,” stated the White House. This order is seen as a precursor to potential copper import duties, which could challenge China’s dominance in the copper supply chain and contribute to price increases.
Copper futures prices have surged by approximately 12% since the announcement, as traders bet on higher premiums and potential tariffs on copper imports. In response, suppliers have rushed shipments to the U.S., reducing supply elsewhere. Trump’s push to bring production back to the U.S. could lead to higher manufacturing costs, potentially driving up inflation.
In addition to the tariff threats, China has ramped up its economic support, setting a 5% GDP growth target and raising its deficit to a three-decade high. The country’s government has also unveiled additional stimulus measures, including efforts to boost domestic consumption, increase household income, and provide childcare subsidies. Earlier this month, Xinhua reported that China would “vigorously boost consumption” and “expand domestic demand in all directions.”
Furthermore, China’s retail sales rose 4% in the first two months of the year, the fastest pace since October 2024, while industrial output and fixed-asset investment also exceeded expectations in February.
As the world’s largest copper supplier and consumer, China plays a crucial role in the global copper market and in driving the transition to green energy. The combination of these factors has propelled copper prices upward, with copper futures increasing by 4.4% last week, marking a three-week streak of gains.
