Key Points
- Copper prices plunged nearly 5% on Friday. The drop was caused by President Trump’s threat of “massive” new tariffs on China.
- The sell-off wiped out a recent rally that supply concerns had driven.
- Trump’s comments sent a wave of fear through global financial markets.
- Copper is highly sensitive to trade tensions because China is the world’s biggest buyer.
The price of copper took a nosedive on Friday after President Donald Trump threatened a “massive increase” in tariffs on Chinese goods. The industrial metal, which is a key barometer of global economic health, plunged almost 5% in its biggest one-day drop in five months.
The sudden slump completely wiped out a recent rally that had pushed copper prices to the brink of an all-time high. That rally was driven by major supply disruptions at huge copper mines around the world, which had investors betting on a coming shortage. But Trump’s latest trade threat has sent a wave of fear through the market, overriding those supply concerns.
In a social media post, Trump said he saw “no reason” to meet with Chinese President Xi Jinping at a planned summit later this month, citing China’s recent “hostile” export controls on rare earth minerals. He then floated the idea of a massive new round of tariffs as a potential countermeasure.
The comments sent shockwaves through global financial markets. Stocks fell, while safe-haven assets like bonds and gold rallied. Copper is especially sensitive to this kind of news because of its widespread use in manufacturing.
China is the world’s biggest buyer of the metal, so any hit to its economy from new tariffs would have a direct and immediate impact on copper demand.
