US copper tariffs of 50% threatened by President Donald Trump could be cushioned by recent stockpiling, while a floated idea of a potential 200% pharmaceuticals levy is "unlikely", according to UBS.
Mark Haefele, chief investment officer of the Swiss bank, said metals traders and markets have "anticipated US copper tariffs and have responded by building up US inventories in recent months".
"We think this stockpiling should help cushion the initial impact, but once tariffs take effect and lower-duty copper stockpiles are depleted, US buyers could face materially higher prices."
President Trump also revived the idea of a 200% tariff rate on pharmaceuticals, but this is "unlikely to materialize, in our view, given the cost it would impose on drugs and the recent reduction in Medicaid coverage", Haefele said.
Re-shoring US pharmaceutical manufacturing "would require a longer lead time than this suggests, in our view".
Haefele said the timing of Trump's outbursts on copper and pharma tariff threats was alongside revived reciprocal tariff threats and the new bilateral trade deal deadline, which "suggests the Trump administration is trying to pressure the EU and other trade partners into faster deals by creating uncertainty and risk".
UBS clients were warned not to over-react in the near term, given the lack of clarity on what policies will actually be imposed and when.
Elsewhere, Citi analysts said the copper tariff was a "watershed moment" for the copper market, which could "abruptly close the window for further significant US-bound copper shipments".
Winners and losers
Italian copper cables group Prysmian's shares jumped 3.8% on Wednesday, while US copper producers Freeport-McMoRan was up 2.5% on Tuesday, while Southern Copper was down 1.4% as most of its operations are overseas.
London-listed mining and commodities trader Glencore PLC (LSE:GLEN) was down 2%, with copper specialist Antofagasta PLC (LSE:ANTO) down 1.2% and Anglo American PLC (LSE:AAL) was 1.6% lower, despite sharp rises in copper prices.
Citi and Deutsche Bank highlighted Prysmian as a "relative tariff winner", with a US low-voltage business that sources its raw copper from a Freeport mine in Arizona and operates its own copper rod mill in Texas rather than buying copper rod from suppliers.
"As such, its domestic, vertically integrated set-up in copper gives it a competitive edge compared to smaller players in our view," said Citi.