Copper prices hit worst drop since 1989 due to Trump

Copper prices plummeted more than 18.18% on Wednesday afternoon after U.S. President Donald Trump imposed a 50% tariff on imports of semi-finished and by-product products with high copper content.

The most-traded copper futures on the Chicago Mercantile Exchange (CME) closed down 18.18% at $4.63 per pound, their lowest level since May 12, when they hit $4.6210.

On Wednesday, the price of the red metal reached a low of $4.5360, representing a drop of 20.4 percent.

Furthermore, the drop it recorded is the deepest since October 26, 1989, when it fell 99%, according to data from Investing.

Copper had a 39.5% return so far this year before the news, but with the decline, its performance dropped to 14.98 percent.

The White House said Wednesday it would impose 50% tariffs on semi-finished products, such as copper pipe and wire, and so-called derivative products, such as pipe fittings and cables.

However, the United States excluded “input” materials, such as copper ores and concentrates, and instead subjected them to new rules governing where they could be sold.

Tariff uncertainty

Jesús Anacarsis López, deputy director of analysis at Banco Base, commented that the adjustment in the copper price was due to the White House's confirmation of the mineral tariff that will go into effect next month, as the new rules and the focus solely on semi-finished products came as a surprise to the market.

"This tariff does not apply to copper ore as a raw material; rather, it applies to products made with copper, such as copper tubes, wires, bars, sheets, and pipes," the expert explained.

Brian Rodríguez, a stock market analyst at Monex Casa de Bolsa, stated that the market had anticipated a tariff on copper; however, it was applied to semi-finished products.

"The metal's decline is due to the fact that tariffs are more focused on semi-finished materials rather than raw materials," the bank expert explained.

Copper will lose its appeal

Experts agreed that the red metal could cease to be a safe haven asset for investors.

Among the aspects they mentioned are that companies have increased their reserves, which is why demand will decline in the coming months, and the strengthening of the dollar will make the mineral less attractive.

Rodríguez predicts that companies already have an overstock of the industrial metal, "which will naturally lead to a decrease in demand, causing the metal's value to fall, and making it less attractive as a safe haven asset."

For his part, Anacarsis stated that there are two factors that will put pressure on the price of the metal.

First, tariffs on raw materials or unprocessed materials will not be levied, and second, the strengthening of the dollar, "the recovery of the US currency affects demand for safe-haven assets."

Actions are dressed in red

Shares of publicly traded mining companies fell sharply in trading Wednesday after Trump signed significant tariffs on copper imports.

On Wall Street, shares of Ivanhoe Electric, a mining company focused on the exploration and development of high-quality copper and silver projects, fell the most, falling 16.67% to $9.25.

Also the Freeport-McMoRan mining company, with a 9.46% drop, followed by Southern Copper, a mining company and subsidiary of the Mexican conglomerate Grupo México, with a 6.33% drop.

On the Toronto Stock Exchange, stocks such as Taseko Mines, Hubday, Ero Cooper, and First Quantum Minerals lost 7.79%, 6.55%, 4.71%, and 1.96%, respectively.

On the Mexican Stock Exchange (BMV), shares of Grupo México, the main copper producer in Mexico and one of the largest in the world, fell 3.7% yesterday.