Copper tumbles 18% on Trump tariff surprise sending Sandfire, BHP, and RIO shares lower

The Trump administration’s trade policy is once again rattling global commodity markets. This time, copper is in the firing line. On Wednesday, the administration unveiled its latest round of tariffs, announcing a 50% levy on copper pipes and wiring. Previously, US-based copper prices on the COMEX futures exchange had been rising in anticipation of heavy tariffs being imposed, but this was not a case of buy the rumour, sell the fact. Rather, it was the details – what was left out – that ultimately spooked markets.

Refined copper, cathodes, ores, and concentrates were excluded from the new tariffs, contrary to widespread expectations that the new tariff regime would target the entire copper supply chain. The result was a dramatic repricing of copper on the COMEX exchange, with prices plunging more than 18% – their largest one-day fall since the COVID-era rout of 2020. The drop unwound a premium that had built up over the London Metals Exchange (LME) benchmark in recent months, and it sent the stock prices of US copper producers tumbling.

Local copper producers like Sandfire Resources (ASX: SFR), BHP Group (ASX: BHP) and Rio Tinto (ASX: RIO) are also trading lower today, but so far have not been as harshly treated as their US counterparts. This article unpacks the specifics of the new copper tariff plan, explores its impact on prices and producers, and provides context on why longer-term fundamentals remain the more relevant guide for investors.

It's what was left out that matters!

In a reversal from earlier rhetoric, the Trump administration’s copper tariffs focus only on downstream products. Key details include:

• Tariff Scope: 50% tariff applies only to semi-finished copper goods—such as pipes, tubes, cables, and electrical components.

• Exclusions: Copper ores, concentrates, cathodes, anodes, and scrap are explicitly excluded.

• Start Date: The tariff will come into effect on Friday.

• Justification: The White House cited national security concerns, stating that copper imports “threaten to impair the national security of the United States.”

Markets had expected a far more sweeping policy. When Trump initially teased copper tariffs in early July, the implication was a blanket tax covering everything from mine output to refined cathodes. Analysts and traders had priced in that expectation – causing both copper consumers and producers to divert shipments from other markets to the US. This forced up the copper price on COMEX compared to the other major global benchmark, LME copper.

Markets have been forced (very quickly) to reprice COMEX copper much lower after the update, which most view as an about-face on the Trump administration's import tariff policy. The result is a painful whipsaw for market participants – both copper traders and producers.

A premium evaporates

As mentioned earlier, the front-month COMEX copper contract plunged in Wednesday’s trade after details of the new tariff proposals were released. To put the reversal into context, the contract made it’s 2025 peak exactly a week ago at US$5.96/lb and is now trading at US$4.50/lb – down a whopping 25%. This puts it back at levels around President Trump’s inauguration back in January, and prior to his ramp-up in tariff rhetoric.

High Grade Copper Futures (Front month, back-adjusted) COMEX

A striking development has been the collapse in the COMEX-LME price premium. For much of 2025, COMEX copper traded at a hefty premium (up to 30%) over LME prices, as traders front-ran possible US import restrictions. As can be seen in the chart below, which compares percentage price moves across the two over the last 12-months, this premium is now gone (COMEX copper in red vs LME copper in green).

COMEX High Grade Copper (Red) vs London Metals Exchange Copper (Green)

Wednesday’s plunge eliminated one of the key arbitrage drivers in the copper market and removed a core source of upside for US producers. The US market now faces the opposite problem: an inventory glut. In a research note released today titled “North America Copper – Copper S232 Excludes Refined Products”, major broker Citi estimated that “several hundred thousand tons” of excess copper, stockpiled in anticipation of higher prices, may now need to be liquidated.

Historically, the LME has served as the global copper benchmark, while COMEX tends to reflect North American dynamics. The reversion of the COMEX price toward the LME level signals a realignment with global supply and demand fundamentals and a sharp end to speculative premiums.

Who really pays?

While Wednesday’s copper rout hit all producers to some extent, US-based miners bore the greatest impact. Shares in Freeport-McMoRan (NYSE: FCX), America’s largest copper producer, tumbled 9.5%, with other domestic names like Southern Copper (NYSE: SCCO) (-6.3%) and Hudbay Minerals (NYSE: HBM) (-7.0%) similarly sharply lower.

The reason? These companies were among the biggest beneficiaries of the COMEX premium, and their revenue assumptions were pegged to inflated local pricing. That premium has now evaporated.

For ASX-listed producers, the pain is likely milder, but still noticeable based on stock price moves so far today. SFR is down 3.3% at the time of writing, but it was down 9% on the open, and BHP and RIO are also sporting modest falls compared to their US counterparts – by 1.8% and 1.9%, respectively – both also well off their lows of the session.

Sandfire Resources (SFR) intraday chart Thursday, 31 July

These relatively mild declines reflect the fact that all three producers are likely to face a limited impact from COMEX gyrations as their respective refined copper output and export profiles are generally ex-US. Ultimately, the market response reflects the degree of US revenue exposure, rather than copper production capacity alone.

Fundamentals matter more

While tariff drama dominates headlines, long-term investors may do well to focus on fundamentals. According to local broking and research house Barrenjoey, the copper outlook is shaped by diverging forces on both the demand and supply sides. Here are the key points from a research note titled “Joey's copper signals” released on Monday:

Copper market demand factors

• Chinese apparent consumption is up 8% year-on-year, with appliances and autos strong.

• Chinese property and manufacturing sectors remain weak.

• Global PMIs are improving, reflecting a possible recovery in broader industrial demand.

• US tariff fears may have pulled demand forward, weighing on second half 2025 consumption.

Copper market supply factors

• Chilean exports (25% of global supply) are up 6%, outperforming expectations.

• Peru’s exports are down 4%, missing targets due to operational disruptions.

• Indonesian exports are constrained by licensing issues, possibly easing in the second half of 2025.

• Global copper supply growth remains stalled due to a drought in final investment decisions.

Copper price outlook

The net result according to Barrenjoey, is supply and demand expectations are both being revised down, but longer-term deficits are emerging. The broker notes that the copper market has now gone two and a half years without sanctioning a major new project, a trend that may create shortages by 2027-28.

Barrenjoey forecasts a COMEX copper price of US$4.28/lb for the second half of 2025 – which implies potential further downside as the latest tariff plans are digested by the market. However, longer term, the broker notes that an incentive price of US$5.00/lb is seen as necessary to spur new investment. “We are much more bullish on copper prices in the medium to longer term,” they conclude.

Looking through the tariff noise

The Trump administration’s tariff announcement has rocked copper markets, triggering a sharp fall in the COMEX copper price and unwinding speculative premiums. For investors, this means lower prices of copper stocks – from the NYSE to the ASX. But when the dust settles, it’s worth asking: What has really changed?

The headline tariff does not affect refined copper, cathodes, or concentrates, the lifeblood of global trade in the red metal. Instead, it targets a narrow band of downstream products. The market’s outsized reaction stems not from actual restrictions, but from the sudden absence of them – an about-face that has exposed short-term speculative positioning.

In essence, what we’ve witnessed is the rapid removal of the COMEX-LME copper premium. The fundamentals of the global copper market, however, remain largely intact. Supply constraints persist. Demand is still robust in key sectors. And the investment pipeline for new projects remains dry.

For ASX copper producers like Sandfire, BHP, and Rio Tinto, today’s volatility may present more noise than signal. In the end, investors may be better served looking through near-term tariff turbulence and toward the structural trends reshaping the copper market for the decade ahead.