Trump Backs BRICS "Anti-U.S. Policy": Proposes 10% Tariff Hike, Key Metals Like Copper and Aluminum Volatile

Abstract:

On July 6, Donald Trump announced a 10% tariff on economies supporting BRICS countries' "anti-American policies." This policy landed like a depth charge in the metals market, instantly disrupting global supply chains. Key commodities such as copper, aluminum, and stainless steel experienced immediate volatility. Beneath this market turbulence lies not only a rewriting of trade rules but also a strategic contest over resource pricing power amid great power rivalry.

Copper: Dual Shock from Green Transition and Geopolitical Supply Disruption

Global copper prices surged on July 1–2, with inventories at both the London Metal Exchange (LME) and the Shanghai Futures Exchange near historic lows. As the world's largest consumer of copper—accounting for 55% of global demand—China depends on imports for 68% of its copper supply. However, Trump's policy directly targets the South America–China copper supply chain. If copper concentrate exports from Chile and Peru to China are deemed influenced by BRICS policies, the tariff could raise costs by up to $200 per ton.

More critically, the Democratic Republic of Congo (DRC), which supplies 70% of the world's cobalt—a core material in electric vehicle batteries—could face similar tariffs. Inclusion of Congolese cobalt in the tariff list would reshape global cost structures in the green energy industry.

Yet, crisis brings opportunity. Russia's Norilsk Nickel has announced an expansion of refined copper exports to China, using ruble settlements to circumvent dollar-related risks. Meanwhile, copper and cobalt projects in Zambia and the DRC are being fast-tracked. Global copper production capacity is expected to increase by 1.1 million tons in 2025, potentially offsetting part of the tariff impact.

Aluminum: New North-to-South Flows Amid Cost Restructuring

U.S. tariff threats against Russia's UC RUSAL have pushed European aluminum prices past $3,500 per ton. In response, RUSAL has diverted 500,000 tons of aluminum ingots originally destined for Europe to China, creating oversupply pressure in the Chinese market.

China, however, is not standing idle. Aluminum Corporation of China (Chinalco), in partnership with Rio Tinto, is accelerating production at the Simandou iron ore project in Guinea. By vertically integrating from bauxite to alumina to electrolytic aluminum, China aims to raise its overseas equity-based aluminum capacity to 35%, mitigating raw material risks arising from tariffs.

Stainless Steel: Diverging Realities and Strategic Detours

The stainless steel market presents a tale of two extremes. The EU has escalated its anti-dumping investigation into Indonesian stainless steel exports, while Trump's tariff threats add further pressure. In response, Indonesia's Tsingshan Group announced a $5 billion investment to build a plant in Mexico, leveraging the zero-tariff advantage under the United States–Mexico–Canada Agreement (USMCA) to supply U.S. automakers directly. If such "indirect export" strategies proliferate, the global stainless steel trade landscape could be fundamentally reshaped.

Pricing Power: The Shift from Commodity to Financial Asset

At its core, Trump's tariff policy serves as a defensive tool for dollar hegemony. In contrast, BRICS nations are accelerating efforts to build a "de-dollarized" trade system. Russia now settles oil sales in renminbi, Brazil repays U.S. dollar debt in yuan, and India promotes rupee-ruble local currency settlements. These developments directly challenge the pricing authority of Western exchanges like LME and COMEX.

China's Shanghai crude oil futures, denominated in yuan, are increasingly used by countries like Iran and Venezuela, contributing to an independent pricing system.

In metals derivatives markets, cracks are already showing: implied volatility for copper options on the Shanghai Futures Exchange has risen to 45%, while LME copper futures open interest dropped by 12% in one week. Capital is shifting from traditional exchanges to emerging platforms such as the Dubai Gold and Commodities Exchange (DGCX), where the newly launched "BRICS Metals Index Futures" saw an 80% month-on-month surge in trading volume.

Supply Chain Restructuring: A Tariff-Induced Industrial Revolution

Corporations are now forced to strike a balance between cost and compliance:

• Tesla has announced a 30% reduction in aluminum use at its Berlin plant, opting for recycled aluminum and magnesium alloys instead;

• CATL (Contemporary Amperex Technology Co.) is partnering with Indonesia's state-owned mining firms to develop nickel and cobalt projects, using a "minerals-for-technology" strategy to bypass tariffs;

• Hydro's newly built green aluminum plant in Norway has received an EU carbon border tax exemption, becoming the world's first "zero carbon premium" aluminum supplier.

This restructuring is rewriting industry norms. According to the World Bureau of Metal Statistics (WBMS), the global copper inventory-to-consumption ratio is projected to fall to just 12 days in Q1 2025—a ten-year low. Meanwhile, the average cash cost of aluminum smelting has climbed to $2,800 per ton, up 22% from 2024.

Future Outlook: Emergence of a Multipolar Metals Order

Trump's tariff initiative is acting like a domino, accelerating the shift of the global metals supply chain from a "unipolar dependency" to a "multi-centered network." BRICS countries are building a parallel system through resource integration:

• Supply Side: Brazil's Vale is expanding nickel production; Russia is boosting palladium exports; South Africa is increasing its supply of platinum-group metals;

• Demand Side: ASEAN countries are absorbing relocated electronics manufacturing; Middle Eastern sovereign wealth funds are investing in critical minerals for clean energy;

• Financial Side: Digital currencies are being linked to mineral assets—Russia's "digital ruble" now supports gold redemption.

In this upheaval, there are no permanent winners. When tariffs hit even America's allies, the U.S. itself suffers blowback: an aluminum plant in Alabama laid off 2,000 workers due to EU retaliatory tariffs; auto unions in Michigan warn of large-scale strikes if aluminum prices break $4,000 per ton. The violent shocks in the metals market are merely the tip of the iceberg in the ongoing global power realignment.