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Copper gets hit as Trump’s Tariffs threaten outlook for demand

Copper slumped with other industrial metals after President Donald Trump ratcheted up the trade war between the world’s two biggest economies with a fresh sweep of tariffs on Chinese imports that’ll kick in next week and may be followed by yet another round of levies.

Copper retreated as much as 1.5% to $5,855 a metric ton, before trading at $5,876 in Shanghai, leading declines on the London Metal Exchange. The metal used in pipes and wires is headed for a fourth straight monthly loss, and has dropped 19% this year.

Base metals have been hit hard by the US-China conflict on concerns that the standoff will hurt economic growth and damage demand. In the latest move, the Trump administration said it will impose a 10% tariff on about $200bn of Chinese products from Monday followed by a planned step-up to a 25% rate from next year, marking a significant new phase in the fight. If Beijing retaliates — as policy makers have vowed — the US will immediately pursue further tariffs on about $267 bn of imports, President Trump said.

The risks for raw materials were flagged up by BHP Billiton Ltd., the world’s largest miner. In its annual report released on Tuesday, the company said that while its long-term view remained positive, challenges remained in the near term, including a “marked rise” in protectionism and geopolitical uncertainty.

“The rise of US-China trade tensions and other protectionist measures, along with an increasingly unpredictable policy-formation process in some major economies, serve to reduce consumer confidence and business certainty,” BHP said in the report. “By extension, this affects investment and jobs.”

The latest salvo from the U.S. threatens to push metals below recent lows. For copper, a close below $5,801 a ton in London would be its worst since June last year. Zinc fell 0.2% to $2,315 a ton, and a close below $2,300 would be its weakest since 2016.

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