Copper, Rio and BHP fall as Trump wavers on tariffs. Buy the dip?

Reuters reported overnight that the White House still hasn't decided on tariffs for refined copper.

The report contained little new and relied on unnamed sources, but it reminded the market that US copper tariffs are not a foregone conclusion and that the Trump administration is worried about affordability.

That was enough to knock LME copper 3% lower and Comex almost 5%. Copper equities followed, with ASX: BHP in London dropping 4%, ASX: RIO 4% in New York and Freeport-McMoRan 7%.

Why the copper tariffs are so important

Trump's tariffs have been the primary catalyst for copper's record highs this year. Traders like Trafigura and Glencore have sought to front-run them and shipped enormous volumes of copper to the US, tightening the global market.

The 2026 rally has not been primarily driven by fundamentals. The market has stayed roughly in balance despite production setbacks at Grasberg in Indonesia, Kamoa-Kakula in the DRC and falling grades at BHP's Escondida in Chile, thanks to more scrap-based production and softer Chinese demand growth.

Data centres help at the margin, but for now this is more narrative than fact: they are forecast to account for less than 5% of global demand for the next three years.

The clearest sign that tariffs have been driving prices is the spread between Comex and LME copper. On Thursday it briefly turned negative, making shipments to the US uneconomic.

On paper, the world isn't short of copper just yet. The International Copper Study Group forecasts a small 2026 surplus. The catch is it's sitting in American warehouses. CRU had forecast a 639,000-tonne surplus for 2026 but now sees the market as balanced at best if US stocks stay put. That has also blunted China's usual buyers' strike. Chinese buyers stepped back early this year, but by July they were paying record import premiums as US stockpiling and a domestic scrap squeeze tightened supply.

What happens if Trump TACOs?

If refined copper tariffs are shelved, the Comex premium should evaporate and some US stock could be re-exported, turning scarcity outside the US into a glut. My rough guess is copper could fall another 10% or more on sentiment alone. Macquarie forecasts a floor of US$11,000 a tonne by the third quarter of 2027.

Glencore CEO Gary Nagle, who would know better than me, disagrees. He argues US stockpiles will be used locally over time rather than re-exported, given the costs involved and because Comex metal is already duty-paid.

How exposed are ASX miners?

Copper delivered 54% of BHP's FY26 underlying EBITDA and 39% of Rio's in the first half of 2026, and both plan to lean further into copper.

The two most copper-focused producers on the ASX are more sensitive still. Capstone Copper's 2026 EBITDA guidance ranges from US$1.3 billion to US$1.7 billion across copper prices of US$5.50 to US$6.50 a pound. Copper sits at the top of that range; a 10% fall would take it towards the middle. Sandfire is a little less pure, with copper making up about 69% of its 154,000 tonnes of copper-equivalent output in FY26 and zinc and silver most of the rest.

Even some gold miners are exposed. Evolution's 66,000 tonnes of copper in FY26, alongside 715,000 ounces of gold, equates to roughly a fifth of revenue at recent prices on my numbers.

That leaves investors making a binary political bet, like buying a biotech ahead of trial results. Not everyone has the stomach for that.

Conclusion – what should investors do?

Shares and equity ETFs are for investors prepared to hold for years. Short-term, prices move on noise and sentiment, which are by nature random. Long-term, they follow earnings trends and trajectories. That's why PDSs and TMDs set out suggested investment timeframes.

Time frame matters more than ever for copper. Until Washington decides, expect choppy, headline-driven trade. Further out, the backdrop is more supportive. Global mine output fell 1.1% in the first half of 2026, on course for the first annual decline since 2017, and S&P Global expects demand to rise 50% by 2040.

If you buy the dip, buy it for 2030, not next week's headline.

Copper miners ETF

For investors wanting diversified exposure to copper miners, the ETFS Global Pure Play Copper Miners ETF (ASX: CPPR) launched this quarter with a management fee of 0.39%.