LONDON – President Donald Trump’s pro-business agenda helped start the copper rally, and now he is upending it with protectionist trade policies that threaten to derail a boom in the world’s economies.
Copper prices are poised for their first quarterly drop since before Trump’s shock election victory sent industrial metals prices soaring as traders bought into his pledge to cut corporate tax and boost investment in aging US infrastructure.
“When Trump was elected, everybody thought his policies were going to make life easier for business,” Daniel Briesemann, an analyst at Commerzbank, said by phone from Frankfurt. “Now, we’re talking about a possible trade war and the negative effect that’s going to have on the global economy.”
Little has happened with Trump’s infrastructure plans so far, Briesemann said.
At $6 602 a metric ton on the London Metal Exchange, copper has declined almost 10% from a three-year peak in December and is set to snap six straight quarters of gains. The metal is also trading below its 200-day moving average for the first time since late 2016, when Trump was elected.
Prices fell as much as 1.9% on Monday after Chinese officials and state media talked tough over the weekend, saying the US President’s plan to impose tariffs on their exports could backfire on the US and dent sales at American corporate giants including Apple, Boeing and Intel.
LME copper stockpiles also hit the highest level in more than 10 months and spot contracts traded at steep discounts to futures, suggesting ample supply.
The risk is that Trump’s trade policies contribute to a “vicious circle” where weaker growth saps demand as rising inflation, higher interest rates and import tariffs increase costs for consumers, Briesemann said.