Just three months after being hit by Trump's copper tariffs, is the "most profitable" arbitrage trade making a comeback?

Just three months after being hit by the previously loud but ineffective tariff order from Trump, the copper arbitrage trade, once dubbed "one of the most profitable commodity trades in modern history," has made a comeback. Recent news indicates that traders are once again betting that the Trump administration will impose high tariffs on copper next year.

According to media reports from Friday, November 7, Eastern Time, in recent weeks, several trading giants, including Mercuria Energy Group, Vitol Group, and Trafigura Group, have been in talks with Chilean producers to secure annual agreements for copper supply to the U.S. in 2026, with some traders' payment prices exceeding the London Metal Exchange (LME) benchmark copper price by more than $500 per ton. These traders' bids are about ten times the spot purchase price from Chinese manufacturers.

The price of copper futures on the New York Comex has once again surged significantly above the LME's copper futures price. This reflects investors' expectations that the Trump administration may restart the commodity-level copper tariff plan next year, suggesting that this year's massive bets on copper tariffs that shook the global copper market may continue to stir the market next year.

Tariff Shadow Lingers as Traders Gamble on Tariff Restart

Earlier this year, traders like Mercuria and Trafigura made huge profits by shipping large quantities of copper to the U.S., completing their arrangements before Trump officially proposed commodity-level copper tariffs in February. Record import volumes tightened the global market, pushing copper prices to historic highs, despite the lackluster demand for this key industrial metal, as manufacturers faced fierce competition for supplies.

Now, the tariff outlook for refined copper has not completely vanished. The U.S. Department of Commerce has suggested delaying the imposition of tariffs, starting with a 15% tariff in 2027 and increasing it to 30% by 2028. Trump has instructed the Department of Commerce to provide an update on the U.S. copper market by the end of June 2026. It is this uncertainty that has once again opened up betting opportunities for traders.

Traders are willing to pay such high premiums because they can resell these goods at higher prices in the U.S. market.

After the media reports on Friday, representatives from Mercuria and Trafigura declined to comment, and a spokesperson for Vitol did not respond to requests for comment.

Three Months Ago: "Most Profitable" Trade Collapses in a Day

Readers of Wall Street Insight should still vividly remember the dramatic turn of events regarding copper tariffs at the end of July this year.

According to CCTV News, on July 30 local time, the White House announced that President Trump signed a notice imposing tariffs on several categories of imported copper products, while excluding copper raw materials. The announcement indicated that starting August 1, a 50% tariff would be universally applied to imported semi-finished copper products (such as copper pipes, copper wires, copper rods, copper plates, and copper tubes) and copper-intensive derivative products (such as fittings, cables, connectors, and electrical components).

At that time, the White House stated that copper input materials (such as copper ore, concentrates, blister copper, cathode copper, and anode copper) and copper scrap were not subject to the "Section 232" or equivalent tariffs The unexpected tariff exemption on this batch of raw copper completely overturned market expectations. The New York Mercantile Exchange copper futures plummeted 22% that day, marking the largest single-day decline since at least 1988, while the London Metal Exchange copper price only fell by 0.9%. Previously, the Comex copper premium had exceeded the LME benchmark price by more than 20%, but after the announcement of the tariff exemption, the price difference quickly disappeared, and Comex copper futures even turned into a discount.

Wall Street Journal mentioned at the time that as of the evening of July 29, only 675 put option contracts were in-the-money, with a nominal value of $94.4 million. After the exemption news was announced, the number of profitable put option contracts exceeded 31,000, with a capital scale of up to $3.54 billion. Phil Streible, Chief Market Strategist at Blue Line Futures LLC, commented at the time that these "lottery tickets" paid off