Copper futures fell below $4.30 per pound on Monday, deepening last week’s 14.1% drop to its lowest level in nine weeks, amid growing fears that President Trump’s escalating trade war could trigger a global recession.
Copper falls to eight-week low
The sharp decline in copper prices was driven by mounting concerns about the economic fallout from the ongoing trade dispute between the U.S. and China. As one of the most widely used metals in global industry, copper is often seen as a barometer for global economic health, and the recent sell-off reflects investor anxiety about slower growth, particularly in China, the world’s largest consumer of copper.
Top consumer China retaliated on Friday by imposing a 34% tariff on all U.S. imports, effective April 10, a move that further strained trade relations between the two economic giants. The Chinese government made it clear that it would not engage in further negotiations unless the U.S. softened its stance, and instead opted for more punitive measures. This escalation added to existing fears that the trade war could extend beyond tariffs and spark broader disruptions in global supply chains, which could hurt economic growth in major markets around the world.
Trump administration downplayed the market sell-off
Over the weekend, the Trump administration downplayed the market sell-off and reiterated its firm stance on reciprocal tariffs, signaling that it was willing to endure short-term economic pain in the hope of achieving long-term trade concessions. Despite this, the administration's emphasis on retaliation failed to convince investors that the situation would stabilize anytime soon, and the broader market sentiment remained cautious. Limited progress in trade talks with key partners, coupled with heightened geopolitical tensions, only fueled concerns about an impending global recession.
Some relief for copper
However, there was some relief for copper in the form of the new U.S. tariffs, which excluded the metal, along with gold, energy, and certain minerals that are not sourced domestically. This exclusion from the tariff list helped mitigate some of the immediate fears that the metal would be directly impacted by the trade war. Copper had surged to record highs in late March on speculation that Trump might target the metal specifically in a bid to address the U.S. trade deficit with China. But as those concerns failed to materialize, copper prices have since pulled back, with investors reassessing the risk of direct tariffs on the metal.
Despite the relief, the broader economic outlook for copper remains uncertain. With both the U.S. and China engaging in escalating tariffs, and the potential for further retaliation, concerns about demand growth, especially in China, continue to weigh on copper prices. As a result, traders are closely monitoring the developments in the trade war, as any significant changes in tariffs or trade policies could have a substantial impact on copper's future price direction.
