ROI-US has built a strategic copper reserve. Now can it keep it?: Andy Home

It turns ​out that the fastest way to build a strategic metals stockpile is to threaten import tariffs but not ​impose them. Ever since US President Donald Trump launched a national security probe ‌into ​copper imports in February 2025, the CME copper price has traded at a premium to the London Metal Exchange (LME) price and metal has flooded through the arbitrage gap into the US.

When tariffs were announced at the end of July of that year, they covered only copper products. The White House has said nothing concrete about refined copper since ‌then. Why should it?

The country is now home to over a million metric tons of copper and more is still arriving thanks to the US tariff premium embedded in the CME price. The US has achieved in the space of 18 months what it took years to do in the Cold War. It is now home to what is probably the second-largest copper stockpile next to China's strategic reserve.

Now the trick will be to keep it. REBUILDING THE RESERVE

The CME has been rushing ‌to open new storage capacity to handle the surge in copper arrivals. New delivery points have been opened in Atlanta, Chicago, Laredo, Memphis and Mobile. The exchange's registered stocks have mushroomed from 88,595 metric tons in February last ‌year to 711,617 tons today.

LME warehouses in the US hold another 127,300 tons of registered stocks and 123,828 tons of off-warrant stocks. Allowing for off-market inventories, analysts at Citi estimate the US stockpile totals around 1.1 million tons.

It's now larger than that accumulated during the Cold War. The US National Defense Stockpile's copper inventory peaked at just over 1 million short tons (900,000 metric tons) in the early 1960s, according to a 1986 report by the World Bank.

The multi-year stockpiling programme, encompassing over 100 metals and minerals, went into sharp reverse in 1962 after President John F. ⁠Kennedy said he "was ​astonished to find that the total stockpile now amounts to ⁠some 7.7 billion dollars' worth of materials", a level that far exceeded emergency requirements. The strategic reserves were gradually sold down over the subsequent decades. By 1971, copper holdings had fallen to 250,000 short tons and the very last ton of copper left a government warehouse in 1993.

More than three ⁠decades later, metals security is back near the top of the White House agenda. So too is the US copper stockpile. KEEPING IT

The big difference between then and now is that the current stockpile is owned by commerce, not by government. The copper is in ​the US because of market structure and, in theory, could leave again if that structure shifts dramatically enough.

The continued pull of the CME premium is currently being met by a growing counter-pull from both London ⁠and Shanghai markets, where cash premiums are rising in reaction to the wholesale movement of metal to the US. Everything, of course, depends on whether Trump imposes tariffs on refined copper. One option left on the table is to phase in tariffs at 15% in 2027, rising to 30% in 2028.

The ⁠problem ​for the White House is that any fixed tariff risks being rendered redundant by market forces. If a shortage in the rest of the world becomes sufficiently acute, the international price will rise above the CME price, whatever tariffs are in place. Another way of keeping the metal in the country would be to channel it into Project Vault, the new public-private mineral reserve. But with copper trading at $14,690 per ton in London and higher on the CME, that ⁠comes with a big price tag, and there are plenty of other critical minerals, such as rare earths, likely to take priority.

Yet, having sold off one copper stockpile, the US wouldn't want to see another one slip ⁠away. You can see why the White House is keeping the ⁠market guessing. Strategic ambiguity is working just fine for now and buys time to decide what to do with its growing copper mountain.

(The opinions expressed here are those of Andy Home, a columnist for Reuters.) Enjoying this column? Check out Reuters Open Interest (ROI), your essential new source for global financial commentary. Follow ROI on LinkedIn, and X.

And listen to ‌the Morning Bid daily podcast on ‌Apple, Spotify, or the Reuters app. Subscribe to hear Reuters journalists discuss the biggest news in markets and finance seven days ​a week. (Writing by Andy Home; Editing by Marguerita Choy)