Copper Skyrockets to New Highs: ETFs to Ride the Tariff Talks

Copper futures skyrocketed as much as 17% on Tuesday to an all-time high after U.S. President Donald Trump threatened to impose a 50% tariff on imports of the commodity, sparking fears of a big supply chain disruption. The surge marked the biggest intraday increase for the commodity since 1989.

The smooth trading in copper has pushed the ETFs linked to this commodity higher. United States Copper Index Fund CPER spiked 8.4%. Copper miner ETFs also surged as mining companies act as a leveraged play on the underlying metal prices and thus tend to experience more gains than their bullion cousins in a rising metal market. Sprott Junior Copper Miners ETF COPJ gained 2.8%, Sprott Copper Miners ETF COPP rose 2.2% and Themes Copper Miners ETF COPA increased 1.3%. 

The proposed tariffs, potentially effective in late July or August, are likely to drive up costs across a wide swath of the U.S. economy, impacting industries from electronics and EVs to construction and data centers. Fearing increased costs, U.S. companies accelerated their copper purchases to stockpile the metal before the enactment of any tariffs. This surge in demand drove U.S. copper prices to record highs. The sudden price surge is expected to intensify this trend in the short term (read: Copper Hits a Three-Month High: ETFs in Focus).

According to the U.S. Geological Survey, over half of the refined copper used in the United States is imported — 38% from Chile, 28% from Canada and 8% from Mexico. 

With demand for copper expected to surge due to the global energy transition, the United States could face increasing pressure on its copper supply. Copper has been facing supply constraints due to a lack of mineral investment and reduced refinery capabilities. Analysts predict a global copper deficit of more than 200,000 tons in 2025, underscoring the imbalance between supply and growing demand. 

The demand for copper has been on the rise amid a rush to build data centers and the continued electrification of the global economy. The red metal is an integral element in manufacturing electric vehicles, power grids and wind turbines, especially as the global economy electrifies. It is also a key metal for cables used in data centers, whose growth has been fueled by an artificial intelligence boom.

Morgan Stanley noted the tariffs would likely inflate domestic prices in the short term as import costs rise, though they expect the effect to fade as local inventories build. Bernstein, in a note released just before Trump’s announcement, predicted higher copper prices through year-end amid expectations of U.S. tariff action and shifting inventories into U.S. warehouses.