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

Just three months have passed since Trump's thunderous yet scant tariffs dealt a heavy blow, and the copper arbitrage trade—once dubbed "one of the most lucrative commodity trades in modern history"—has made a comeback. Latest reports show traders are once again betting that the Trump administration will impose high tariffs on copper next year.

According to media reports on Friday, November 7th, Eastern Time, in the past few weeks, multiple trading giants including Mercuria Energy Group, Vitol Group, and Trafigura Group have recently been in talks with Chilean producers to secure annual agreements for supplying copper to the U.S. in 2026. Some traders are paying more than $500 per ton above the London Metal Exchange (LME) benchmark price for copper. These bids are roughly ten times higher than Chinese manufacturers’ spot purchase prices.

The price of copper futures on New York's Comex has once again risen sharply above that of LME copper futures. This reflects investors’ expectations that the Trump administration may resume its commodity-grade copper tariff program next year, suggesting that the massive bets on copper tariffs that rocked the global market this year could continue to stir up the market next year.

Tariff Uncertainty Lingers; Traders Make Bold Bets on Tariff Resumption

Earlier this year, traders such as Mercuria and Trafigura earned huge profits by shipping large quantities of copper to the U.S., completing their positioning ahead of Trump's first official proposal of commodity-grade copper tariffs in February. Record imports tightened global supply, pushing copper prices to historic highs. Despite weak demand for this critical industrial metal, manufacturers still faced fierce competition for supply.

Now, the outlook for refined copper tariffs hasn’t entirely disappeared. The U.S. Department of Commerce has recommended delaying imposition, suggesting a 15% tariff from 2027 and increasing to 30% by 2028. Trump has instructed the Commerce Department to provide an update on the U.S. copper market by the end of June 2026. It is precisely this uncertainty that has given traders new betting opportunities.

The reason traders are willing to pay such high premiums is that they can resell these goods at higher prices in the U.S. market.

Following the above media reports on Friday, representatives of Mercuria and Trafigura declined to comment, while a spokesperson for Vitol did not respond to requests for comment.

Three Months Ago, "The Most Profitable Trade" Collapsed in a Day

Wallstreetcn readers may still vividly recall the dramatic reversal of copper tariffs at the end of July this year.

According to CCTV News, on July 30th local time, the White House announced that President Trump signed a proclamation to impose tariffs on several types of imported copper products, but excluded copper raw materials. The announcement stated that starting August 1st, a universal 50% tariff would be imposed on imported semi-finished copper products (such as copper pipes, copper wires, copper rods, copper plates and tubes) and copper-intensive derivatives (such as fittings, cables, connectors and electrical components).

At the time, the White House stated that copper input materials (such as copper ore, concentrates, matte copper, cathode copper and anode copper) and copper scrap would not be subject to "Section 232" or equivalent tariff constraints.

This unexpected exemption for raw copper completely upended market expectations. On the day, New York Commodity Exchange copper futures plunged 22%, the largest single-day decline since at least 1988, while LME copper prices fell by just 0.9%. Previously, the Comex copper premium had exceeded LME benchmark prices by over 20%, but after the exemption was announced, the price difference quickly disappeared, and Comex copper futures even turned to a discount.

Wallstreetcn noted at the time that as of the night of July 29th, only 675 put option contracts were in the money, with a nominal value of $94.4 million. After the exemption announcement, the number of profitable put option contracts soared past 31,000, totaling $3.54 billion. Phil Streible, chief market strategist at Blue Line Futures LLC, commented then that these “lottery tickets” had paid out.

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