Copper futures climbed back above $4.20 per pound on Tuesday in a likely technical rebound after experiencing a sharp decline of as much as 20% over the prior three sessions, driven by fears of a tariff-induced global recession.
Copper rises as sentiment improves
The sell-off had been sparked by growing concerns that escalating trade tensions could severely impact global economic growth, particularly in key industrial sectors that rely on metals like copper. However, investor sentiment improved following comments from US President Donald Trump, who signaled a willingness to engage in trade talks with key partners, including Japan. This shift in tone fueled hopes that a de-escalation in global trade tensions could be on the horizon, boosting optimism in commodity markets.
US Treasury Secretary Scott Bessent added further support, stating that nearly 70 countries had reached out to the White House seeking to negotiate tariffs, suggesting a potential window for dialogue and diplomatic resolution. Despite this more conciliatory tone, market volatility is expected to remain high, as President Trump has threatened to impose an additional 50% tariff on Chinese imports if Beijing does not remove its own duties on US goods. This threat has kept market participants on edge, as any escalation in the trade war could exacerbate economic slowdowns and disrupt supply chains for raw materials like copper, which are crucial for manufacturing and construction.
Certain sectors have been shielded from the latest rounds of tariffs
Meanwhile, while the broader tariff measures have spooked commodity markets, certain sectors have been shielded from the latest rounds of tariffs. Notably, Trump’s new tariffs do not apply to copper, gold, energy, and certain minerals that are either unavailable or produced in limited quantities within the United States. This exclusion provided some relief to these industries, preventing further price pressures and keeping supply chains stable. Nonetheless, the broader market remains cautious, as the uncertainty surrounding the potential for further tariffs or trade barriers could influence commodity demand and price stability in the coming months.
As the situation unfolds, market watchers will continue to monitor trade negotiations and any new developments in tariff policy, which are likely to shape the outlook for copper and other critical commodities.
