Tariffs Reshape Copper Market as US Imposes Aggressive Tariff Regime
Copper has become a policy-driven trade due to Section 232 tariffs imposed by the US on semi-finished and derivative copper products, according to Societe Generale analysts Michael Haigh and Jeremy Sellem. Since 2025, the US has been gradually increasing its aggressive tariff regime around copper, with a 50% duty on semi-finished and derivative copper products, and potential duties of 15% in 2027 and 30% in 2028 on refined cathode.
The COMEX-LME arbitrage has shifted from a technical curiosity to a central question for anyone trading or hedging the metal. Historically, the LME's inventory levels have been about 65% higher than COMEX due to its larger warehouse network. However, with tariffs in place, the arbitrage between the two markets has become distorted.
The analysts treat the spread as a mean-reverting series, modestly biased towards a COMEX premium of around $33/mt over 28 years. They use this framework to back out the market-implied probability of future copper tariffs, estimating that there is a 14.6% chance of a 15% tariff by January 2027 and a 37% chance of a 30% tariff by January 2028.