Trump's return could reshape copper trade policies in 2024

The potential re-election of Donald Trump could pose significant challenges for copper stocks in the United States. Analysts, including JPMorgan's Bill Peterson, have raised concerns that Trump's proposed trade policies, dubbed 'Trump 2.0', may lead to increased tariffs on Chinese imports, potentially escalating from 25% to 60%. This shift could have dire consequences for the copper market, which is already sensitive to trade tensions and economic fluctuations. During Trump's first term, the 2018 trade war resulted in a sharp downturn for metal prices, with copper being particularly affected. The imposition of tariffs led to a decline in global mining stocks by over 10%, as fears of reduced demand and increased costs permeated the market. The historical context shows that industrial metals like copper typically underperform following rate-cutting cycles, further complicating the outlook for the sector. As the political landscape shifts, the copper market may experience a pattern similar to that of Trump's first election, where initial optimism was quickly overshadowed by the realities of trade policy. The potential for a post-election boost followed by a downturn looms large, especially if tariffs escalate. In light of these developments, investors are advised to exercise caution. While there is long-term bullish sentiment regarding copper due to structural demand, the immediate macroeconomic risks associated with aggressive trade policies could lead to significant volatility in the market.