Copper futures rose to around $4.90 per pound on Wednesday, reaching a three-week high, as investor sentiment was lifted by hopes of a de-escalation in US-China trade tensions.
Copper gains on easing US-China trade tensions
US President Donald Trump alleviated market concerns by clarifying that the final tariffs on Chinese imports "won’t be anywhere near as high as 145%," while also emphasizing that duties "won’t be 0%" either. His remarks were viewed as a sign that the trade conflict between the two largest global economies might not escalate to the worst-case scenario that had been previously feared. Additionally, Treasury Secretary Scott Bessent described the current tariff standoff as “unsustainable,” further reinforcing the expectation that both sides would eventually seek a resolution. However, formal negotiations with Beijing had yet to begin, leaving room for uncertainty about the pace and terms of any potential deal.
Trump's assurance that he has no plans to remove Federal Reserve Chair Jerome Powell provided another boost to market confidence. This reaffirmation helped stabilize expectations about central bank independence and monetary policy, easing fears of political interference in the Fed's actions. As a result, investors found themselves more optimistic about the broader economic outlook, which contributed to the rally in copper and other commodities.
Potential inclusion of copper in future tariff measures
However, there were lingering concerns regarding the potential inclusion of copper in future tariff measures, adding a layer of uncertainty to the market. Speculation about copper facing new tariffs has intensified, particularly after the recent focus on Chinese imports, given the metal’s importance in a wide range of industries, including construction, electronics, and renewable energy. Despite this uncertainty, traders also considered the possibility that any tariffs on copper could tighten supply dynamics, particularly as China remains one of the largest producers and consumers of copper worldwide.
What boosted prices recently
This tightening of supply, coupled with improving sentiment around global trade negotiations, likely contributed to the recent price surge, as traders bet on a recovery in demand for the metal once trade tensions subside. Copper’s role in infrastructure projects, electric vehicles, and green energy technology has further bolstered its appeal, positioning it as a key barometer of global economic health. With expectations for growth in these sectors, particularly in Asia, copper prices may continue to receive support, particularly if the trade situation stabilizes.
Looking ahead, traders will be closely monitoring the next moves in US-China trade talks, as well as any official announcements regarding tariff policies, which could either provide further upside to copper prices or create additional volatility in the short term.
