Core Viewpoint - The copper market is experiencing significant volatility due to the U.S. government's unexpected tariff policy, leading to a sharp decline in copper prices and a mass exit of long positions from the market [1][2][4]. Tariff Policy Impact - The U.S. announced a 50% tariff on imported semi-finished copper products starting August 1, while exempting refined copper and scrap copper, which contrasts sharply with previous expectations of a blanket tariff on all copper products [2][3][4]. - This targeted approach has led to a rapid liquidation of previously accumulated copper inventories in the U.S., as the market adjusts to the new tariff structure [4][10]. Market Reactions - Following the announcement, COMEX copper futures plummeted to $4.33 per pound, a 21% drop from the previous close, while London and Shanghai copper prices also fell by 0.8% and 1.3%, respectively [1][2]. - The market had previously anticipated a broader tariff application, leading to a surge in copper imports into the U.S. to capitalize on expected price increases [10][12]. Inventory Dynamics - As of July 30, COMEX copper inventories reached 250,000 tons, a significant increase from less than 100,000 tons in February, indicating a major shift in supply dynamics due to tariff expectations [9][10]. - In contrast, LME copper inventories have decreased sharply, highlighting a divergence in inventory trends between the two markets [9]. Future Outlook - Analysts predict that the U.S. copper market will face downward pressure on prices due to the potential for excess inventory to be re-exported to international markets [10][12]. - The tariff policy is expected to disrupt global copper supply chains, with major copper-exporting countries potentially redirecting their shipments to Asia and Europe [12][13]. Industry Implications - The tariff's impact on copper prices may increase costs in sectors such as automotive and renewable energy, prompting companies to consider domestic alternatives or adjust their supply chains [12]. - The long-term effects of the tariff policy on the copper market will depend on how well downstream industries can adapt to the new pricing environment and whether they can mitigate the impact of increased costs [12][13].