Key takeaways

• On July 8, 2025, President Trump indicated that the United States would impose 50% tariffs on copper imports. The tariffs are expected to be imposed by end of July or start of August.
• In response to the threat of tariffs, the global copper market has experienced significant change, as traders and end users seek to stockpile metal in the United States ahead of potential tariffs.
• Legal issues that may arise with tariffs and market conditions include: which party is responsible for costs of tariffs, delays in transport and logistics, and counterparty defaults.
• Market participants can take practical steps to limit the risk of legal issues arising, including stress testing their copper sale and purchase contracts.

Introduction
On July 8, 2025, President Donald Trump indicated that the United States would impose 50% tariffs on copper imports. It is understood that the tariffs will be imposed by the end of July or start of August. This follows the US Commerce Department’s initiation of an investigation into copper imports announced in late February. Since the announcement, U.S. copper imports have increased significantly, as traders and end users seek to stockpile the metal ahead of any potential tariffs.

The prospect of U.S. tariffs has had a pronounced effect on the global copper market, including:

• Comex and LME price differentials: The price differential between the Commodity Exchange (COMEX) copper contract, which requires physical delivery in the United States, and the London Metal Exchange (LME) copper contract, which allows physical delivery at various global locations, has reached unprecedented levels.¹
• Inventory shifts: Significant volumes of copper have been shipped out of Europe and Asia and into the United States. This has led to “acute shortages” of the metal in Europe and Asia.²
• Backwardation: Copper prices have moved into backwardation, meaning that the spot price (i.e., the price for immediate delivery) is higher than the forward price (i.e., the price for delivery at a future date). In June 2025, the LME spot price was nearly $400 per metric ton higher than the three-month forward price, which has been described as “one of the biggest ever backwardations.”³ 
• Risk of Short Squeeze: Market commentators have raised concerns about a potential “short squeeze,”⁴ where rising prices force holders of short positions to buy at a loss to cover their positions, but in doing so drive up prices further, exposing other short position holders to additional losses. 

Given the scale and pace of developments, any legal issues arising from current market conditions – and the potential imposition of tariffs – are likely to be specific to individual market participants, contract terms and factual circumstances. Nonetheless, some broader considerations may be generally relevant to market participants buying and selling physical copper ahead of the potential tariff imposition.

Responsibility for the cost of import duties
Parties contracting to sell or purchase physical shipments of copper for delivery into the United States should ensure their contracts clearly specify which party is responsible for any import duties that may be imposed. Under the U.S. customs regulations, the importer of record is responsible for any duties and tariffs.

While there is variation across the market, spot contracts for the sale and purchase of base metals (which usually consist of a short trade confirmation incorporating general terms and conditions (GTCs)) typically provide that taxes, tariffs and duties imposed on the metal in the country of origin will be borne by the seller, and those imposed in the country of discharge or the importing country are to be borne by the buyer. Where such a provision applies, the buyer will be responsible for the cost of any U.S. tariffs imposed on copper imports, even after the execution of the contract.

Some base metals GTCs may not include an express provision relating to taxes and duties but instead incorporate Incoterms. In such cases, if, for example, the trade confirmation provides for delivery on an FOB basis, the buyer will be responsible for the cost of any tariffs, whereas if the trade confirmation provides for delivery on a DDP basis, the seller will be responsible for the cost.

The position may be less certain where the contract does not contain an express provision relating to taxes and duties and does not incorporate Incoterms. In such cases, if governed by English law, the contract will need to be interpreted based on the entirety of its contractual provisions. If there are conflicting provisions there may be increased scope for dispute.

Consequences of delays in transport and logistics
If tariffs on U.S. copper imports are imposed, even relatively minor delays in transport and logistics could result in copper shipments arriving after the tariffs come into effect and being subject to import duties that would not have applied otherwise. The risk of these delays may be increased as market participants put a strain on transport and logistics services in the rush to import shipments before tariffs are imposed. Further, given President Trump’s indication that the tariffs could be set at 50% of the value of the copper, such delays could have a significant financial impact on the party bearing the cost.

For example, if a shipment is due to arrive in the United States before the tariffs come into force but is delayed due to congestion at the load port and the buyer is required to pay the tariffs, the buyer may seek to bring a claim against the seller for those additional costs. The question of whether the seller would be liable for such additional costs will likely depend on whether the shipment was delivered late under the contract, and if so and on this scenario, whether the port congestion fell within the definition of the force majeure (FM) clause in the contract. In some cases, there also may be an issue as to whether the additional costs were reasonably foreseeable such that they would be recoverable as damages.

To limit the risk of liability for such claims, before concluding a trade parties should consider whether the contractual timeframes for performance of their obligations can be fulfilled even if some delays occur. Where transport or logistics delays do occur in connection with a shipment, a seller should immediately consider whether the delays fall within the definition of FM, and if so, give notice of an FM in accordance with the contractual provisions – even if the delays are likely to be minimal or seems inconsequential at the time.

Risk of counterparty defaults
The unique current market conditions, combined with recent disruption to copper production, may increase the risk that counterparties fail to meet their obligations under sale and purchase contracts.

In relation to sellers, the current shortage of copper supplies in Asia and Europe may result in parties being unable or unwilling to source shipments for concluded contracts requiring delivery in these regions. For example, due to the arbitrage opportunities created by the significant price differentials between U.S. and non-U.S. copper and the copper spot and forward price, there may be an economic incentive for a seller to renege on its obligations to an existing buyer and instead resell the shipment to another buyer.

In relation to buyers, if a buyer agreed to purchase a copper shipment for delivery into the United States based on the mistaken expectation that tariffs would not be imposed at the time of import, the imposition of the tariffs may mean that it is no longer economically rational for them to take delivery of the shipment.

While economic reasons ordinarily will not excuse a party from non-performance of its obligations under a sale contract, parties may seek to rely on clauses that give them a route to suspend or terminate their obligations on other grounds. Examples of such clauses typically seen in base metals GTCs include the abovementioned FM and material adverse change, the latter of which may entitle a party to declare an event of default if there is a deterioration in the other party’s creditworthiness. Parties looking to avoid their obligations may also seek to take advantage of inadvertent or technical breaches by the other party to engineer a right of termination, for example, an event of default caused by a short delay in opening a letter of credit.

Parties can limit the risk of counterparty defaults by contracting with reputable, creditworthy counterparts who may be less likely to walk away from their contractual obligations if the market turns against them. Parties can also prepare for potential counterparty defaults by familiarizing themselves with their contractual rights and remedies if it appears a counterparty may fail to perform its obligations. Finally, as a defensive measure, parties should exercise diligence to avoid an inadvertent breach of contract that a counterparty might exploit to engineer a termination.

Conclusion
Current conditions in the global copper market have undoubtedly created commercial opportunities and challenges for suppliers, traders and end users alike. These challenges and opportunities appear set to continue – and may intensify – as the imposition of tariffs on U.S. copper imports potentially draws closer. It remains to be seen whether the market uncertainty will lead to widespread legal issues between parties under copper sale and purchase contracts, and if so, the nature of those issues. In the meantime, market participants may consider stress testing their contracts to ensure they are prepared for any legal consequences that may arise.

1. Copper’s Transatlantic Divide: What The Price Gap Between New York And London Means For Traders
2. Copper​ Market Hit by Major Supply Squeeze as LME Inventories Drop
3. Copper Faces Historic Squeeze With LME Stockpiles Depleting Fast
4. Copper prices surge as traders rush to beat Trump tariffs

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