Copper price in a push & pull between tariffs and economic jitters

Copper prices are on a rebound as the market reacts to Trump’s executive order on the metal’s imports. While it is uncertain if, when, and by how much the president will impose the levies, commodity traders are grabbing this opportunity to secure profits. 

The rush to ship and accumulate the red metal gives the bulls an opportunity to retest the 9-month high hit in mid February 2025. Even so, market participants are concerned that the aggressive tariffs will redirect trade flows as opposed to raking in higher revenue. 

In addition to the tariff jitters, easing of the US dollar has bolstered copper price. However, economic uncertainties continue to curb its gains.

Tariff jitters bolster copper price back above crucial support zone

Even before entering the Oval Office for his second presidential term, Trump consistently threatened to impose hefty tariffs on various US imports including those from Canada, Mexico, and China. Since his inauguration, he has made good on some of those threats; a move that has investors across the financial markets concerned over probable retaliations and their impact on the economy.

In the latest round of trade war, the US President has ordered the Department of Commerce to probe into the country’s copper imports on the grounds of national security. According to some government officials, dumping has negatively impacted copper production in the US; making critical items like weapon systems to be reliant on imports.

Besides, according to Commerce Secretary, Howard Lutnick, the country’s copper industry “has been decimated by global actors attacking our domestic production. Tariffs can help build back our copper industry, if necessary, and strengthen our national defense.”

If the investigation finds any form of dumping, Trump’s administration will likely impose quotas or tariffs among other measures. This comes about two weeks after he announced the reinstatement of 2018’s 25% tariffs on steel in addition to increasing aluminum levies by 15% as from March.    

While the US is still a key producer of copper, imports account for close to 40% of its consumption. Chile, Canada, and Mexico are its top sources accounting for 38%, 28%, and 8% of its copper imports respectively. 

In reaction to the executive order, COMEX copper price rebounded to a two-week high after dropping below the crucial support zone of $4.50 per pound in the previous session. As commodity traders rush to ship in the red metal from as far as Asia, prices may rise further in the short term.

Economic uncertainties to curb copper price gains

While the copper market remains bullish, concerns over the health of the economy are set to place a cap on its gains. In addition to its status as an industrial metal, it is considered a barometer of economic health.

Data released earlier in the week showed that consumer confidence dropped in February at its fastest rate in 3.5 years. Financial markets are concerned that Trump’s trade policies will be inflationary. 

As a result, more investors are flocking to Treasury bonds; sending the benchmark 10-year yields to the lowest level since mid-December 2024. Lower Treasury yields weigh on the US dollar; an aspect that has offered some support to copper price. Similar to other dollar-priced assets, a weaker greenback makes copper less expensive for holders of foreign currencies. 

The market participants will also be eyeing China’s Caixin manufacturing PMI data in the coming sessions. If the figures hold steady above 50, copper price may find support in heightened optimism over Chinese demand.   

Read more: Copper price forecast as technicals and fundamentals align

Copper price analysis

The daily chart reveals that the price of copper peaked at $4.87 this month and then pulled back to $4.55. It remains above the upper side of the symmetrical triangle pattern and the 50-day moving average. 

Copper has also formed what looks like a falling wedge chart and a bullish flag. Therefore, the price will likely drop and retest the triangle pattern and then resume the uptrend. The initial target to watch will be at $4.87. A move above that level will point to more gains, possibly to last year’s high of $5.20.