Copper’s sharp pullback from record highs is forcing a broader reassessment of what has been driving the rally and how vulnerable it may be as policy risks, speculative positioning, and macro pressures converge.

The metal surged past $14,000 per metric ton this week, a level that would have seemed implausible not long ago for a commodity traditionally anchored to construction cycles and factory output. Within hours, prices reversed course, sliding to around $13,800 as gold and silver also retreated. The coordinated sell-off has reinforced a growing view among banks and economists that copper has been trading less on physical fundamentals and more as part of a wider commodities trade driven by fear, positioning, and geopolitics.

At the center of that reassessment is Washington. President Donald Trump’s decision in July 2025 to impose a 50% tariff on imports of semi-finished copper products and intensive copper derivative products reshaped the US market almost immediately. The policy encouraged aggressive stockpiling by traders and manufacturers seeking to secure supplies ahead of further restrictions. That surge in inventories tightened availability in the US, amplified price momentum, and helped push copper into record territory.

Goldman Sachs now argues that the next phase of US trade policy could have the opposite effect. The bank expects an update on refined copper tariffs by mid-2026 and warns that such a move would likely mark a turning point. Analysts say a refined copper tariff would reduce the incentive to hoard material inside the US and push the market’s focus back to global balances, where supply conditions appear far less constrained. In that scenario, prices would have to adjust to a market no longer propped up by artificial scarcity.

Goldman has already flagged a likely second-quarter correction, even as it maintains a constructive longer-term outlook and recently lifted its copper price target for the first half of 2026. That dual message underscores the tension in the market: strong structural narratives versus stretched near-term valuations.

Copper has also been swept up in a broader metals rally that has seen investors rotate into hard assets amid persistent geopolitical strain. US-China trade tensions, conflicts in key regions, and volatility in currency markets have encouraged capital flows into commodities. Gold and silver have been the most visible beneficiaries, but copper has increasingly traded in sympathy with them, moving more like a macro hedge than an industrial input.

This shift has been reinforced by the metal’s link to the artificial intelligence buildout. Copper is essential for data centers, power transmission, electric vehicles, and grid upgrades, all of which sit at the heart of the AI and electrification story. That narrative has given investors a powerful justification for betting on higher prices, even as near-term demand indicators send mixed signals.

José Torres, senior economist at Interactive Brokers, has cautioned that the enthusiasm is not purely about consumption. He said part of the rally is driven by nationalistic sentiment, particularly in China, where investors are keen to hold assets tied to strategic materials their country may need in a competitive technology race. That behavior, he argued, is less about immediate orders for copper wire and more about positioning for a perceived geopolitical advantage.

Evidence of heavy speculative activity supports that view. Analysts say traders in China have played a central role in driving prices higher, with futures positioning and short-term trades outpacing signals from the real economy. Capital Economics senior commodities economist Kieran Tompkins said it has become clear that speculation is doing much of the work. Indicators tied to construction, manufacturing, and broader demand in China point to softness rather than a boom, raising questions about how sustainable current price levels really are.

Goldman commodities analyst Eoin Dinsmore has been equally blunt, saying copper prices have overshot what fundamentals justify. In his assessment, a refined copper tariff announcement from Trump could be the moment that forces a reset, acting as a catalyst for a broader unwind of bullish positions. Torres echoed that concern, warning that supply-and-demand dynamics suggest copper is trading at extreme valuations.

The parallels with precious metals add another layer of risk. Gold and silver have both surged over the past year, and analysts have voiced concern that those rallies are being driven more by momentum and fear of missing out than by traditional drivers such as inflation expectations or industrial usage. Copper’s recent behavior suggests it has been pulled into the same dynamic, even though its end-use profile is very different.

What happens next may depend on how quickly policy uncertainty is resolved and how patient investors remain. If US stockpiling slows, speculative positions are trimmed, and global supply reasserts itself, copper could face a deeper correction in the coming months. That would not erase the long-term case tied to electrification, energy transition, and AI infrastructure, but it would challenge the idea that prices can continue rising unchecked.

Copper for now is still supported by a compelling strategic narrative, yet the near-term picture is clouded by tariff risks, stretched valuations, and signs that financial enthusiasm has outrun physical demand. The recent pullback may be only the first test of whether this rally can stand on fundamentals alone.

U.S. President Donald Trump has openly warned Britain against deepening business ties with China, sharpening a transatlantic divide at a moment when a growing number of U.S. allies are reassessing their economic and diplomatic strategies in response to Washington’s increasingly unpredictable trade posture.

Speaking to reporters in Washington ahead of the premiere of the film Melania at the Kennedy Center, Trump said it was “very dangerous” for Britain to be getting into business with Beijing. He offered no further explanation, but the remark landed as Prime Minister Keir Starmer was in China, publicly championing a reset in relations with the world’s second-largest economy.

Starmer’s visit, which included more than three hours of talks with Chinese President Xi Jinping, reflects a broader recalibration underway among Western and middle-power economies. Faced with Trump’s aggressive use of tariffs, threats against allies, and willingness to upend long-standing trade norms, governments that once kept Beijing at arm’s length are now reopening channels to China in search of economic stability, market access, and strategic optionality.

During his meeting with Xi, Starmer called for a “more sophisticated relationship” between London and Beijing, pressing for improved market access, lower tariffs, and new investment flows, according to Reuters. The discussions ranged from trade and visas to culture, touching on soccer and Shakespeare, underscoring Starmer’s effort to frame engagement as pragmatic rather than ideological.

Addressing the UK-China Business Forum in Beijing, Starmer described his meetings with Xi as “very warm” and said they had delivered “real progress.” He pointed to agreements on visa-free travel and reduced tariffs on British whisky as tangible outcomes, describing them as “really important access, symbolic of what we’re doing with the relationship.”

“That is the way that we build the mutual trust and respect that is so important,” Starmer said.

The British leader’s message was aimed as much at domestic audiences as at Beijing. Since taking office in July 2024, Starmer’s centre-left Labour government has struggled to deliver faster economic growth, and improving relations with China has become a central pillar of its strategy to attract investment and boost exports. Ahead of his departure for Shanghai, Starmer met senior Chinese executives, including Chery chief executive Yin Tongyue. During the visit, a Liverpool city official said Chery plans to open a research and development center for its commercial vehicle arm in the northern English city.

In London, Trump’s warning drew a sharp rebuttal. British trade department minister Chris Bryant said the U.S. president was “wrong” to describe the UK’s engagement with China as dangerous.

“Of course, we enter into our relationship with China with our eyes wide open,” Bryant told the BBC, emphasizing that Britain was capable of balancing economic interests with national security considerations.

Starmer himself has repeatedly argued that closer economic ties with China do not come at the expense of the UK’s alliance with the United States. Speaking to reporters on the plane to Beijing, he stressed Britain’s long-standing partnership with Washington across defense, security, intelligence, and trade, and insisted London did not have to choose between the two powers. He cited Trump’s own state visit to Britain last September, which unveiled £150 billion in U.S. investment commitments.

A British government official said Washington was given advance notice of Starmer’s objectives for the China trip, an attempt to avoid surprising the White House at a sensitive moment in global trade relations.

Even so, the episode highlights how Trump’s trade policies are increasingly reshaping alliances and geopolitics in ways that may ultimately benefit China. Since returning to the office, Trump has deployed tariffs not only against Beijing but also against close partners, including Canada and the European Union, while floating threats against Denmark over Greenland and pressing allies on defense and trade concessions.

That approach has injected uncertainty into the rules-based global trading system Washington once championed. Canadian Prime Minister Mark Carney captured that shift last week when he urged countries to accept that the old order was ending, explicitly citing U.S. trade policy. Shortly after Carney struck economic deals with Beijing, Trump threatened to impose tariffs on Canada, reinforcing the perception that engagement with China now carries political risk in Washington.

Trump’s Commerce Secretary, Howard Lutnick, echoed the skepticism toward Britain’s China outreach, telling reporters it was unlikely Starmer’s efforts would pay off.

“The Chinese are the greatest exporters and they are very, very difficult when you’re trying to export to them,” Lutnick said. “So good luck if the British are trying to export to China … it’s just unlikely.”

Asked whether Britain could face Canada-style tariff threats, Lutnick suggested that would depend on London’s tone toward Washington.

Despite Washington’s warnings, others are joining the fray. Countries that once distanced themselves from China during its trade war with the United States are now sending their leaders to Beijing in quick succession. In January alone, at least five national leaders, including Starmer and Carney, met Xi. Ireland’s prime minister visited China earlier this month for the first time in 14 years, while Uruguay’s President Yamandú Orsi is due in Beijing next week, marking the first South American presidential visit since Trump captured Venezuelan leader Nicolás Maduro and his wife in early January.

German Chancellor Friedrich Merz is expected to visit China soon, following French President Emmanuel Macron’s December trip, during which Xi accompanied him on a rare excursion outside Beijing.

Large business delegations have become a common feature of these visits, reflecting the enduring pull of China’s vast consumer market and its role in global manufacturing and supply chains.

Beijing, for its part, has seized the moment to present itself as a stabilizing force amid U.S. volatility, urging visiting leaders to provide fair treatment for Chinese companies and highlighting China’s push for technological self-sufficiency and global influence. Senior Chinese officials have framed the country’s modernization drive as an alternative to a “Western-centric” development model, a message that resonates with both developing economies and advanced nations seeking leverage in dealings with Washington.

Still, the balancing act is delicate. Against the backdrop of Washington’s warning that “China sells nothing but cheap products and cheap friendships,” European leaders, including Macron, have continued to signal willingness to impose tariffs or take defensive measures when Chinese trade practices clash with domestic industrial interests.

Starmer, who has traditionally avoided public confrontation with Trump, has nonetheless shown a greater willingness to push back in recent weeks. He called Trump’s remarks about NATO troops avoiding frontline combat “frankly appalling” and said he would not yield to U.S. pressure over Greenland, signaling a subtle but notable shift in tone.

With all these in view, it is now clear that a transactional approach to trade is accelerating a realignment in global diplomacy. While the United States remains the dominant economic and security power, its unpredictability is prompting allies to hedge, diversify, and reopen doors to China.