How a niche copper trade became a real-time gauge of Trump’s next tariff move

One specialist arbitrage trade on a metal commodity is evolving into a real-time gauge of U.S. tariff risk. Copper — seen as a broader economic barometer, with the industrial metal a key component in construction, electronics and transportation — has been on a tear for more than a year, with futures reaching a record high of almost $6.90 per pound last week.The spread between U.S. COMEX futures and London Metal Exchange prices has historically been used by physical traders, banks, hedge funds, producers and consumers to profit from temporary price differences and hedge against price risk between the two markets.The arbitrage was historically driven by factors such as Chinese demand shocks or supply disruption in South America. Now, though, Societe Generale analysts say the trade has been upended by the prospect of fresh Section 232 tariffs on refined copper, pending a White House investigation, with investors increasingly using the COMEX premium as a gauge of further duties.The U.S. already charges a 50% levy on imports of semi-finished copper products and certain other products made with copper. The Commerce Department has recommended a phased universal tariff of 15% on refined co...