Copper futures have been on a rollercoaster this week, and the reason is pretty clear, the market is reacting to the possibility of a hefty 50 percent tariff on imported copper. Prices spiked to an all-time high of $5.89 per pound before settling back to $5.50. For context, copper futures (COMEX: HG) have rarely seen this kind of volatility, and the aftershocks are rippling through industries from construction to electronics.
The mere suggestion of a 50 percent tariff on copper imports was enough to send traders scrambling. The U.S. relies heavily on imported copper, so the idea of a sudden, steep tariff triggered fears of a supply crunch. This wasn’t just a knee-jerk reaction. The premium between U.S. copper and London Metal Exchange futures hit a record 25 percent, a sign that traders expect the U.S. market to tighten even if global prices don’t follow suit.
When prices peaked at $5.89 per pound, it was a clear signal that the market was bracing for major disruption. After the initial panic, some of the froth came off, and copper settled back to $5.50 today, still elevated compared to historical norms. Over the past month, copper prices in the U.S. have climbed nearly 13 percent, and they’re up almost 20 percent from a year ago.
The U.S. produces a significant amount of copper domestically, but not enough to meet total demand. In fact, domestic mines account for just over half of the refined copper the country uses each year. The rest is imported, and that’s where things get complicated.
The United States relies heavily on foreign copper, with the top three suppliers being Chile, Canada, and Mexico. Chile is the world’s largest copper producer and serves as America’s most significant foreign supplier of refined copper, although the U.S. market accounts for less than 7% of Chile’s total refined copper exports. Canada is a key source due to its geographic proximity and strong trade ties with the U.S., making it a reliable provider. Mexico also plays an important role as a neighboring supplier, rounding out the top three countries that together account for a substantial share of U.S. copper imports
Imports from these countries are essential, especially since Arizona, which produces more than two-thirds of all U.S. mined copper, can’t keep up with national demand on its own. The U.S. also imports smaller amounts from Peru and other countries, but Chile, Canada, and Mexico are by far the biggest players.
Can the U.S. Go It Alone? Short answer: not right now. While the U.S. has substantial copper reserves, its mining and refining capacity is limited. There are only two primary copper smelters in the country, and refining capacity is stretched thin. Even if all domestic mines ran at full tilt, the U.S. would still need to import nearly half its copper to keep up with demand.
Arizona leads U.S. production, followed by Utah, New Mexico, Nevada, and Montana. In 2024, U.S. mines produced about 1.1 million metric tons of copper, but that’s not enough for a country that’s hungry for copper in everything from electric vehicles to wiring in new homes.
If a 50 percent tariff is imposed, expect more price volatility. U.S. manufacturers could face higher costs, and industries that rely on copper may have to pass those costs along to consumers. The U.S. simply doesn’t have the infrastructure to replace imports overnight, and building new smelters or opening new mines takes years, not months.
For now, copper’s wild price swings are a reminder that even a rumor about trade policy can shake up global markets. The U.S. remains dependent on its top trading partners for copper, and unless there’s a major shift in domestic production, that’s unlikely to change anytime soon.
