Copper traders have been shipping copper to Hawaii to seize the huge tariff trade opportunities

Following steel and aluminum, US President Trump announced this week that a new 50% tariff would be imposed on all copper imported into the US. On July 9 local time, Trump announced on the social media platform "Truth Social" that the US would impose a 50% tariff on imported copper, effective from August 1, 2025.

Copper traders are racing against time to ship goods to the US, attempting to transfer delivery locations to Hawaii and Puerto Rico to shorten transportation time. This is because Trump's proposed 50% tariff plan could completely strangle this lucrative arbitrage trade, which has plagued the industry for months.

After Trump's initial tariff announcement on Tuesday, New York copper futures prices surged to a premium of about 25% over the international benchmark, LME (London Metal Exchange) copper prices. This means that traders who can ship copper to the US before the new tariff takes effect will reap greater profits; otherwise, they will face huge losses if time runs out.

Trump's latest announcement indicates that the dramatic shifts in the copper market since his initial tariff announcement on copper in February this year have reached a climax. The resulting surge in US copper prices has prompted the entire industry to scramble to ship copper to the US; domestic copper inventories in the US have surged, while other regions of the world are facing increasingly severe supply shortages.

According to informed sources, copper shipments have decreased in recent weeks as some traders began preparing for the tariff announcement. However, they said that a large amount of copper is still being shipped to US ports.

Market participants estimate that US copper inventories may reach 500,000 mt in the coming weeks, with about half stored in New Orleans, an important storage hub in the US. Panama City Port in Florida also stores metals.

Exhausted traders said they stayed up late after Tuesday's tariff announcement to decide how to handle goods already shipped to the US and whether to try to increase shipments. Although the final tariff was expected, the 50% tariff rate is still higher than many market participants had anticipated.

According to market sources, some traders eager to secure metals at the last minute are willing to pay a hefty premium—nearly $400 per mt above the London Metal Exchange (LME) price—and are attempting to divert shipments originally destined for China to the US.

Buyers are particularly willing to pay higher prices for brands that meet the delivery conditions of Comex contracts, which means that if these coppers cannot find other buyers after arriving in the US, they can be resold on the exchange as a last resort.

It typically takes more than a month to transport metal from Asia to New Orleans, so any traders who ship metal now could be adversely affected by tariffs that will take effect early next month.

However, according to a person familiar with the matter, the voyage to Hawaii takes about 10 days, and at least one trader has already completed a shipment to the Pacific island.

Some traders said Puerto Rico is also an equally attractive delivery location for South American producers, as it falls within the US tariff zone.

In Chile, the main supplier of copper to the US, mining companies have been holding meetings to discuss how to prioritize shipments to the US by month-end in July, in accordance with agreements with existing customers.

Trump's announcement means traders are now racing against the clock - especially those who have already paid a hefty premium to secure copper shipments. They could have made huge profits by shipping copper to the US, but now face the risk of tariffs taking effect while the copper is in transit.

Traders are also grappling with a range of unknowns. Beyond timing, Trump's remarks have left questions about what types of copper will be subject to tariffs. The metal tariffs previously imposed by the US government also exempted shipments that were already in transit at sea, providing potential wiggle room for traders willing to take risks.

The price spread between New York and London is well below 50%, indicating uncertainty about whether the 50% tariff will indeed be universally applied to copper cathode imports.

(Comprehensive report from Wenhua)