A 50% tariff on imported copper is set to take effect Aug. 1, and global markets are already responding. Copper is a critical material used in home construction, semiconductor chips and electric vehicle batteries — and now, signs are emerging that shipments originally bound for the United States are being diverted to other destinations, including China.

Commodities traders have anticipated the tariff for months, triggering a flood of copper imports into U.S. ports.

“They're trying to see, can they take advantage of what I've been seeing called as a once in a generation trading opportunity,” said Daan De Jonge, lead copper analyst at Benchmark Mineral Intelligence. Selling copper at a premium and bringing it into the country ahead of the new tax. De Jonge has been watching this happen from his London-based perch.

“Already, since March, we've been seeing almost double the usual volumes of copper heading to the U.S.,” said De Jonge

The announcement last week of the 50% tariff’s Aug. 1 start date changed the landscape. Once the tariffs kick in, traders will no longer be able to command premium prices, yet large quantities of copper were still en route to the U.S.

“You're not necessarily going to … fully sort of complete the transaction before the tariff deadline,” De Jonge said. “So, I think you know, that's why all of a sudden, we're seeing a lot of volume sort of being rerouted.”

Some shipments are now being diverted to countries such as China and Canada.

“The reality is that copper will probably just stay outside of the United States,” said Gracelin Baskaran, the director of the critical mineral security program at the Center for Strategic and International Studies.

She said traders are now likely going to wait to see whether the U.S. tariffs actually stick. In the meantime, a large amount of copper ore could remain in storage instead of being processed into usable metal.

“You have to remember that there is limited smelting capacity globally, so it's likely also to potentially create backlogs in the global supply chain,” said Baskaran.

Such backlogs can lead to higher prices, as seen during the COVID-19 pandemic.

And copper is essential across a wide range of industries.

“It can affect the auto industry,” said Ryan Young, senior economist at the Competitive Enterprise Institute. “It can affect construction, plumbing, electricity.”

Some sectors have no real alternatives to copper — making them particularly vulnerable to supply disruptions.

“Electrical utilities, because whether you’re using fossil fuels or renewables, you’re still going to use copper transmission wires,” said Young.

So, in the short term, global copper traders walk away with hefty profits. Meanwhile, some shipments are redirected abroad, and American companies are left paying higher prices for the copper they can still acquire.