Copper prices have soared as the US threatens tariffs on the metal and China boosts its economy

Copper prices have hit record highs as an ongoing trade war between the U.S. and its key trading partners threatens to squeeze supplies of the vital metal.

Buyers in the U.S. have been stocking up on copper ahead of potential tariffs. Future prices for the base metal hit $5.21 per pound on Tuesday. Prices are up about 30% so far this year, following modest gains over the last several years.

President Donald Trump has threatened to impose a tariff of up to 25% on all copper imports and has called for increasing U.S. production. China, the world's largest importer of copper, is embarking on a stimulus program that could further increase demand for the base metal.

“Tariff threats, tightening supply, and stimulus-fueled optimism for an economic rebound in China have underpinned a rally in copper.” said Adam Turnquist, chief technical strategist for LPL Financial.

Copper is critical to energy infrastructure around the world. It goes into cords for electronic devices, transmission lines, batteries, and LED lights. A global shift to cleaner energy technology, such as solar power, had already been boosting demand, which is expected to keep growing as the development of artificial intelligence technology puts more of a strain on data centers and the energy grid.

“When you look at the uses of copper in today’s economy, those uses and the intensity of use of copper in today’s economy are growing,” said Kathleen L. Quirk, President and CEO of mining giant Freeport-McMoRan, at a recent conference for the global metals industry.

The International Energy Agency expects demand for the base metal to rise 20% to 31,128 kilotons by 2030 and by 41% to 36,379 kilotons by 2040. The U.S. mined about 1.1 million tons of copper in 2024. It currently lags the top producers, including Chile, Peru and China.

Copper mining companies are gaining ground amid rising demand. Shares of Freeport-McMoRan, which operates most of its open-pit copper mines in the U.S., are up 12% this year. Southern Copper, which has operations in Mexico and Peru, is up 8% for the year. The broader market has been slipping, with the S&P 500 down about 2%.

The rising price of copper has a potential downside for some businesses and consumers.

The construction industry, including homebuilders, could face a tighter financial squeeze because of copper's rising cost as demand fails to keep pace with supplies. Stubborn inflation has already pushed home construction costs higher. Total construction costs for a single-family home rose just under 9.2% in 2024 from the previous year, according to the National Association of Homebuilders. Higher copper prices, coupled with higher prices for other key building materials such as lumber, could worsen inflation for the sector.

Appliances, electronics and other products containing copper could become more expensive, also fueling inflation and prompting consumers to cut back on spending for certain items.