(repeats Thursday story, no changes)

By Andy Home

LONDON, July 31 (Reuters) - The copper market got the

tariff right but the products wrong.

U.S. President Donald Trump's proclamation "to address the

effects of copper imports on America's national security" was

not what traders were expecting.

There will be 50% tariffs on copper imports effective Friday

but only on semi-manufactured products such as wire and tube.

Refined copper is excluded, at least until January 2027, when a

tariff may be phased in if warranted.

The tariff trade, which has defined the copper market since

February, has imploded. The CME's U.S. contract

plummeted by more than 20% on the news, wiping out the previous

high premium over the London Metal Exchange (LME) price.

The United States is now awash with metal it doesn't need

after traders shipped huge tonnages through the yawning

arbitrage gap.

The copper market forgot Trump's tendency to back down on his

most extreme tariff threats. It has, to borrow a current

investor meme, just been TACO'd, which stands for Trump Always

Chickens Out.

COPPER PRODUCTS TARGETED

The tariffs on semi-finished copper products cover between

400,000 and 500,000 metric tons of annual U.S. imports.

America imports considerably more copper as refined metal.

Imports last year were just over 900,000 tons.

Canada is the largest single supplier of copper products to

the U.S., but the supplier base is highly diverse. Last year's

imports of copper tubes, for example, came from 32 different

countries.

The tariffs will also be extended down the product chain to

copper-intensive derivative products such as cables, connectors

and electrical components, likely ensnaring more supplier

countries.

The new tariff wall should be a boost for domestic

processors, but only if they have the capacity to cover the

range and quality of what is currently being imported.

The number of product-specific exemptions granted in the

coming months will provide an answer.

SCRAP WARS HEAT UP

The tariff wall on products will be complemented by

restrictions on exports of U.S. mined concentrates and

recyclable copper.

A quarter of domestically-produced "copper input materials"

will be required to be sold in the United States from 2027. That

rate will rise to 30% in 2028 and 40% in 2029.

That may need more capacity than exists at the current three

domestic smelters, even assuming Grupo Mexico

reactivates its idle Hayden plant in Arizona.

"High-quality copper scrap" will also be subject to a 25%

minimum domestic sales requirement to stimulate domestic

recycling.

It's not clear what types of scrap qualify or how such a

measure is going to work in practice, but the move marks an

escalation in the simmering scrap wars.

The European Union is also considering export quotas on

recyclable copper to stop what it calls "scrap leakage."

The prime target is China, which is the world's largest

buyer of secondary raw material.

The country imported 2.25 million tons of copper scrap in

2024, the highest annual total since 2018, the year before

authorities tightened up the purity specifications on imported

material.

Imports have already slowed this year thanks to a 42% drop

in shipments from the United States due to the high CME price

premium.

Growing resource nationalism in the global scrap market

promises profound structural changes in the flow of recyclable

materials.

CAN WE HAVE OUR COPPER BACK NOW?

But not for refined copper, which is what everyone was

expecting.

Big trade houses have shipped over half a million tons of

copper to the United States for a trade that is now redundant,

even if it was a bonanza for those involved.

CME warehouses currently hold 232,195 tons of copper, which

is the highest tonnage since 2004. Metal is still arriving daily

thanks to the last-minute dash to beat what traders thought was

the August 1 deadline.

The supply chain in the rest of the world is still

compensating for the huge suction effect created by the prospect

of tariffs.

China exported almost 260,000 tons of refined copper between

March and June, compared with 78,000 tons in the prior

four-month period.

Some of it was delivered against a short squeeze on the

London market created by the raid on LME stocks for

U.S.-deliverable brands of copper.

Some of it was non-Chinese metal stripped from bonded

warehouses and shipped directly to the United States.

China's surging export flows have depleted Shanghai Futures

Exchange stocks, which have fallen to 73,423 tons, the lowest

level since December.

While the futures tariff trade has collapsed overnight, the

physical supply chain will take longer to readjust.

Analysts are already running the numbers to gauge whether it

makes sense for copper to reverse flow back out of the United

States.

SAME TIME NEXT YEAR?

Is that it for the copper tariff trade?

Probably not, given the explicit reference to the option of

a phased tariff on imports of refined copper, starting at 15% in

2027 and rising to 30% in 2028.

It will depend on an update on the state of the domestic

market by Commerce Secretary Howard Lutnick scheduled for the

end of June next year.

It also depends, of course, on whether Trump changes his

mind again before then.

You never know with Tariff Man.

The opinions expressed here are those of the author, a

columnist for Reuters.

(Editing by Elaine Hardcastle)