Commerzbank’s Thu Lan Nguyen explains that Base Metals have risen on renewed US tariff uncertainty and a weaker Dollar. She highlights the risk that Washington could extend sectoral tariffs on steel, aluminium and copper, prompting US firms to front-load copper imports and tighten LME supply, even as earlier plans to roll back some metal tariffs argue against broad expansion.

Sectoral tariff risk underpins metals

"Base metal prices have risen in response to the new US tariff uncertainty. This may be partly due to a weaker US dollar. However, renewed fears about the introduction of sectoral tariffs could also be playing a role."

"So far, US President Trump has responded to the Supreme Court's decision to declare most of the tariffs introduced to date unlawful by announcing a global flat-rate tariff of 15%. As of today, a base tariff of 10% applies. However, based on the legal basis used, this will only apply for 150 days."

"For example, the decision does not affect sectoral tariffs, such as those on steel, aluminium, and copper. It is therefore conceivable that the US government will extend these. In the case of copper, this could mean that copper refines could also be subject to higher tariffs in the future."

"Fearing such an expansion of tariffs, US companies could once again increase their imports of copper to build up stocks, thereby reducing supply outside the US, which in turn would push up the price on the LME. However, the fact that the government had recently apparently planned to withdraw some of the tariffs on aluminium and steel argues against an expansion of sectoral tariffs. It remains to be seen whether this will still happen after the tariff ruling."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)