Donald Trump came back into office, copper has surged on a seismic reshuffling of global inventories linked to the risk that he’ll impose tariffs on the metal. But as Trump nears the halfway mark on his second term, the market’s many bulls are growing wary that prices could crash if he doesn’t follow through.

Until the past few weeks, copper futures in New York had traded at persistent premiums to the global benchmark set on the London Metal Exchange, and that’s enabled traders to make unprecedented profits shipping copper to the US before any levies come in. In turn, inventories outside the US have plunged, with ongoing US imports fueling a feedback loop that helped drive LME prices to a record near $15,000 a metric ton last month.

But with the midterm elections approaching, investors across markets are questioning whether a strong showing for the Democrats will disrupt Trump’s trade agenda — or whether it might even prompt him to double down on tariffs. And for copper bulls, the consequences could be profound if Trump is found to be unwilling or unable to push ahead with the levies.

Analysts at Natixis SA have warned that the tariff trade has created a bubble in the market for one of the world’s most important industrial commodities, and it could soon burst if tariffs are ruled out. Macquarie Group says prices could crash toward $10,000 a ton in that scenario, or they could rally as far as $18,000 if tariffs are announced with a lag that would allow traders to ship even more metal to the US.

“I have never seen anything like this before, with the future price direction ultimately resting on the decision of one man,” Alice Fox, a commodities strategist at Macquarie said in an interview.

As the midterms approach, there are signs that traders are increasingly willing to bet against tariffs, with their wagers centered on the spread between copper futures on New York’s Comex and the LME. The two markets used to move in near-lockstep, but Comex prices — which would be inclusive of duties if Trump introduces them — have traded at huge premiums over the LME since Trump first formally proposed tariffs on copper in February 2025.

Traders can sell Comex and buy LME contracts to bring the markets back into line, but until recently, such arbitrage activity had dropped off almost entirely, according to Marc Bailey, the Chief Executive of Sucden Financial Ltd., one of the market’s largest brokerages. That’s because traders who’ve sold Comex contracts could face large losses if Trump does push ahead with tariffs.

But in recent weeks, Sucden has been fielding inquiries from investors taking a renewed interest in the trade. Over the same period, the spread between Comex and LME prices has collapsed, with the decline accelerating after a Reuters report last month stating that Trump’s plans for copper tariffs had stalled due to concerns about their inflationary impact.

“In the past few weeks, the mood seems to have shifted a bit,” Bailey said in an interview in London. “People are starting to consider dipping their toes back in.”If the trend gathers steam, investors’ growing willingness to bet against tariffs via the Comex spread could have major consequences for the market, by continually negating the incentive for traders to ship more metal to the US.

In the physical copper market, US-bound shipments of copper from Africa are already dwindling as the Comex spread collapses, according to data from ship-tracking firm Kpler. And while doubts about tariffs are growing, traders are also mindful of the wildcard possibility that Trump will announce tariffs right after the midterms, and before their vessels land.

As the metals industry’s annual LME Week gathering kicks off in London this weekend, the collapse in the Comex spread is adding fuel to the debate about whether gravity might catch up with copper as surging energy prices, rising interest rates and a faltering stock market pose threats to the demand outlook.

As those risks grow, the contrasting supply dynamics in the US and the rest of the world are offering another incentive for traders to sell the Comex spread, according to Alastair Munro, a metals strategist at Marex Group, another major metals brokerage.

Recently, the LME’s growing supply constraints have caused front-month prices to rise relative to those on Comex, narrowing the gap between the two contracts as they approach maturity. The September-delivery contract, for instance, shed more than $600 a ton in the month before delivery, with Comex settling at a premium of less than $4.

“There’s greater appetite to sell New York and buy London because there’s a natural predilection for the arb to close as it comes into prompt,” Munro said by phone from London. “The arb is one manifestation of it, but there’s a growing eagerness to be short copper more generally on a bearish macro view.”To be sure, copper traders have been badly wrong-footed by Trump on tariffs before, most painfully in July last year, when he introduced 50% levies on downstream copper products while leaving the commodity-grade form of the metal traded in futures markets untouched.

That sent Comex prices crashing, but until recently they’ve remained at a substantial premium to the LME because Trump left the door open to imposing them in future. Ever since, the copper market has been in the grips of the polarizing debate over whether he will.

While doubts about tariffs are growing, few in the copper market expect him to rule them out entirely, because doing so could allow the vast stockpiles that have accumulated in US ports to flood back out into international markets. One popular theory is that Trump’s silence on tariffs is a deliberate ploy to create ‘strategic ambiguity’ to prevent that.

But given how central tariffs have been to Trump’s political agenda, some still expect him to push ahead — potentially as soon as Jan. 1, in line with advice given to Trump last year by the Commerce Dept.

“The key uncertainty is US tariff policy,” said Grace Li, investment director of Shanghai Ducheng Private Equity Fund Management Co. “With little visibility into the administration’s thinking, it is difficult to make a straightforward directional case for either going long or short copper.”Already, the US’s copper stockpile is so vast that it could take years for manufacturers to work through. In the meantime, the oversupply has created a rare opportunity for traders to buy up inventories and lock in a small profit by selling futures contracts on Comex.

These so-called contango financing deals are adding further complexity to the debate surrounding supply dynamics and the outlook for prices going into next year.

The profits on offer are meager compared to the bonanza opportunities created by the US import trade. Still, they’re lucrative enough that analysts at Bank of America Corp. say it could keep copper from flowing back out into the global market — helping keep prices propped up even if Trump does back down on tariffs.

And for anyone taking a bearish view on copper, the risk that Trump will move ahead with tariffs still looms large. Under the Commerce Dept.’s recommendation, the levies could be introduced in phases, set at 15% in 2027 and 30% in 2028.

That could mean copper will keep getting pulled into the US, reigniting the global bidding war that’s lifted copper to record highs. In top consumer China, inventories have already been drawn down aggressively, and if they’re forced to restock at the same time as US imports are surging, prices risk corkscrewing higher.

“They probably thought that this whole stockpiling would be done by now,” said Helen Amos, a commodities analyst at BMO Capital Markets Ltd. “What if they think: ‘Actually, this is going to go on for another two years’?”