US Commerce Secretary Howard Lutnick announced an expected release of 15 to 20 letters in the coming days. He mentioned potential copper tariffs in late July or August and planned trade talks with China, alongside US Treasury and Trade representatives, in early August.

A trade war involves countries using extreme protectionism like tariffs, leading to increased import costs. The US-China trade conflict began in 2018 with US tariffs on Chinese goods, to which China responded in kind. Despite a Phase One deal in 2020 to ease tensions, tariffs largely remained.

Trump’s Return And Trade Tensions

With Donald Trump’s return as US President, heightened tensions with China are anticipated. During his 2024 campaign, Trump promised to impose 60% tariffs on China. This rekindled trade war affects global economies and supply chains, influencing spending and contributing to inflation.

This information includes forward-looking statements and should not be considered as investment recommendations. Thorough research is encouraged before making financial decisions. The views expressed are those of the authors, who are not registered investment advisors, and no responsibility is taken for reliance on this information.

Lutnick’s comments suggest a near-term deluge of official notifications aimed at specific trading partners, which we interpret as preliminary positioning ahead of broader trade policy maneuvers. While these letters might carry only diplomatic weight at first, they indicate a firm gear-change in Washington’s posture toward trade, especially concerning copper—a raw material embedded deeply in industrial supply chains. The mention of potential tariffs on this metal by late summer adds a timing element that could coincide with liquidity shifts in commodities futures and broader repricing across inputs for tech and energy firms.

What’s more, the announcement of high-level trade talks with Chinese officials this August implies internal US alignment across fiscal and trade authorities. It also prepares the ground for policy recalibration rather than sudden escalation, but history tells us that these meetings rarely proceed without preparation of administrative levers. The 2018-2020 period remains instructive here: tariffs announced then triggered chain reactions that extended far beyond their initial scope, often surprising even seasoned market participants. Many instruments saw volatility spikes not directly tied to fundamentals but rather to political timing and regulatory uncertainty.

Metals Market Impact And Global Responses

In our reading, there are several pressure points that could become visible once these letters are released. Traders who rely on correlations between equity volatility and metals could see distortions. For spreads involving copper and related assets—such as aluminium or rare earth contracts—hedging costs may pick up. That’s especially the case if language in the letters reveals product-level granularity or hints at retroactive policy.

Tariff speculation isn’t new, but the return of Trump to the White House adds a layer of forward risk that isn’t purely theoretical. His campaign promise to enforce a 60% duty on Chinese imports frames the market not around “if” but around “when”—and more importantly, “how much.” Institutions will likely start embedding these assumptions into pricing models earlier than some might expect. It’s not only a question of direct tariff impact, but anticipatory behaviour—front-loading purchases, stockpiling, altering supply chains—that begins well before the legal instruments come into play.

It’s important to treat early summer as a window where expectations will harden. We’ve seen in previous years how miners, freight operators, and finished goods manufacturers respond to even indirect regulatory signals. For derivatives markets, that means opportunities will come from watching margin shifts and implied volatility around commodity-linked names. For example, divergence between futures and spot in metals ETFs could widen if tariff probabilities creep into overnight rates or dollar-based carry calculations.

What’s arguably more pressing is how other trade partners respond. In past cycles, tit-for-tat measures arrived faster than consensus models suggested. Canada and the EU, for instance, adopted early retaliatory tariffs on select US goods. This isn’t distant history—it sets precedent. For anyone engaged in synthetic exposure to global trade patterns via FX options or cross-border indices, that’s worth watching closely.

We aren’t anticipating a repeat of 2018’s exact sequence. But the architecture is familiar: public letters, economic signalling, international meetings, and gradually escalating tariffs. Traders can no longer assume a stable trade environment for Q3. Revisions to models may need to consider not just the headline tariffs, but adjustment in implied risk premia across sectors—particularly tech, mining, and industrials.

As always, this shouldn’t be understood as advising action, but interpreting context. Data is volatile, sentiment is reactive, and instruments move fast once policy gets priced. We’ve seen this cycle before.

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