By Ian Salisbury

Copper just endured its worst day ever, and economic weakness in the U.S. and China -- along with historical commodity price patterns -- suggest it could have farther to fall.

On Wednesday the Trump administration announced its long-threatened tariffs on copper. The levies weren't as broad as many feared, covering semifinished products such as copper sheet and wires, but excluding input materials and copper scrap. That led to a major selloff by investors who had been stockpiling copper in the U.S., hoping to beat the imposition of new taxes.

Prices for front-month Comex copper contracts tumbled 22%, or $1.24, to $4.33 per pound Wednesday afternoon, according to Dow Jones Market Data. It was the metal's largest one-day percentage decline on record, going back to 1968.

Copper mining stocks have also been hit hard, with Southern Copper down nearly 7% this week and Freeport-McMoRan down 11%.

Some market watchers took the declines in stride, arguing they offer a healthy corrective to prices that had recently gotten out of whack. Worries over the potential impact of tariffs had led traders to hoard copper located in the U.S., sending U.S. copper prices up around 40% since the start of the year.

The upshot was that, on the eve of tariff announcement, near-month copper futures on the U.S.-based Comex were trading at a premium of nearly 30% to similar contracts in London. The arrival of not-as-bad-as-feared tariffs immediately erased the differential, which shrunk to about 1% on Friday.

That much-reduced price discrepancy led some to breathe a sigh of relief.

"This shift hopefully reintroduces a degree of certainty into the copper market, allowing focus to return to fundamental drivers rather than the headline-driven trading that has characterized much of 2025," wrote Neil Welsh, head of metals at Britannia Global Markets.

Copper's problem, of course, is that even if fundamentals do drive prices, those fundamentals are looking shaky. While copper prices have recently gotten a boost from growing electricity demand, it remains one of the most economically sensitive commodities, particularly tied to growth outlooks in the U.S. and China.

While the Federal Reserve declined to lower short-term interest rates earlier this week, odds of a September cut sharply increased Friday following weaker-than-expected jobs data. China's economy has also been sputtering, with a slumping property market and tepid consumer spending raising questions about whether growth can hit Beijing's 5% target this year.

Historical price patterns don't offer much comfort either. U.S. copper's recent surge resembles that of another economically-sensitive commodity, crude oil, on the eve of the 2008 financial crisis, according to Bloomberg senior commodity strategist Mike McGlone.

Economic dislocations sent crude prices surging to a high $147 a barrel in the summer of 2008, before the bursting housing bubble led prices to tumble as low as $32. Today oil trades $68 a barrel, around half the value of its 2008 high.

If copper prices were to settle at a similar discount from its all-time high of $5.80 a pound, set just over a week ago on July 23, it could trade at around $3 a pound, the price where it hovered for much of the 2010s before surging past $4 in 2021, McGlone argues.

"Severe post-peak downturns are common in commodities," he notes. "What stops copper from reverting to $3 after breaching $5? For nearly two decades, the metal has tended to pivot around $3."

Write to Ian Salisbury at ian.salisbury@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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August 01, 2025 13:24 ET (17:24 GMT)

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