Freefall of Freeport-McMoRan Shares This WeekLinked to Trump's Tariff Decisions.
In a significant turn of events, the Trump administration's decision to exempt refined copper imports from tariffs has had a profound impact on Freeport-McMoRan's investment case. This strategic move has allowed the company to reap the benefits of tariff-driven price premiums, all while maintaining its competitive edge in the U.S. market.
Effective August 1, 2025, a 50% tariff was imposed on copper imports as part of a U.S. Section 232 national security measure. However, refined copper imports were exempted from these tariffs, leading to a surge in the COMEX copper price premium to 28% above London Metal Exchange benchmarks. This shift has translated to an estimated $1.7 billion annual benefit for Freeport-McMoRan’s domestic operations, which produce 70% of the U.S. refined copper supply.
The tariff-driven premium, combined with Freeport's vertically integrated operations spanning mining, solvent extraction/electrowinning, and smelting, has significantly insulated the company from supply disruptions and boosted its pricing power. This strategic positioning has enabled Freeport-McMoRan to capture substantial value as a low-cost, vertically integrated copper producer dominating U.S. refined copper output, thereby enhancing its revenue and profitability potential.
This tariff environment, rooted in the Trump-era Section 232 decision and its exemptions, has coincided with surging global copper demand driven by electrification, renewable energy, and AI infrastructure growth. As a dominant producer, Freeport-McMoRan is poised to fill a supply deficit of 650,000 metric tons through 2025. The operational leverage from fixed costs and the company’s scale magnify profitable upside from higher copper prices, further improving Freeport's investment appeal.
Despite a recent decline in Freeport-McMoRan's shares, the company's current enterprise value of about $67.7 billion remains attractive. This is particularly true given that even with the premium dissipated, Freeport is expected to generate $12.9 billion in EBITDA.
It is important to note that Freeport-McMoRan also benefits when the international price of copper traded on the London Metal Exchange (LME) is taken into account. The premium for the U.S. price of copper on COMEX and the international price on LME was in play in 2025, but is no longer a factor in the current market situation.
In a recent earnings call, Chairman Richard Adkerson was a part of the discussion, but the current situation of the disappearance of the premium on the COMEX price of copper was not addressed. However, according to Freeport's models, a 50% COMEX premium would result in 20% higher EBITDA in 2026-2027.
Despite the disappearance of the premium on the COMEX price of copper, the stock of Freeport-McMoRan remains attractive. This is due to the company's dominant position in a structurally tight global copper market and its strong operational efficiency, which form a core part of investor optimism toward Freeport-McMoRan stock in the current market.
In conclusion, the tariff exemption on refined copper imports has preserved Freeport-McMoRan's strategic advantage in U.S. copper production, reinforced its capacity to capture tariff-related premiums, and sustained a lucrative investment case anchored in structural market deficits and strong operational efficiency.
- The exemption of refined copper imports from tariffs under the Trump administration's Section 232 national security measure has created a lucrative investment case for Freeport-McMoRan, providing a significant annual benefit of $1.7 billion for its domestic operations.
- The tariff-driven premium, combined with Freeport-McMoRan's vertically integrated operations, has insulated the company from supply disruptions and boosted its pricing power, enhancing its revenue and profitability potential.
- Despite the disappearance of the premium on the COMEX price of copper, Freeport-McMoRan's stock remains attractive due to its dominant position in a structurally tight global copper market, strong operational efficiency, and the company's capacity to continue capturing value in the finance and business industries.
