A major shift in the US political landscape has struck at the two key pillars that had been driving copper prices higher 鈥?the rapid buildout of artificial intelligence (AI) infrastructure and the prospect of US tariffs on imported copper 鈥?sending copper prices to their lowest level since July.
After falling 1.2% on Thursday, London Metal Exchange (LME) copper futures were down 0.4% as of the time of writing.
The market is now concerned that gains by Democrats in Congress and in multiple states will lead to tighter regulation of artificial intelligence, and that stricter AI oversight and local-level restrictions on data centre construction could slow the pace of US AI infrastructure investment.
Copper is widely used in the cables and wiring of data centres and power equipment, especially in data centre power supply systems, grid connections, and transmission and distribution infrastructure.
In recent years, AI data centre construction has become an important new driver of copper demand growth. As large technology companies continue to expand data centres, demand for high-voltage power equipment, transformers, cables, and grid upgrades has risen in tandem. Compared with AI chips themselves, the power infrastructure behind data centres is an equally significant consumer of copper and other industrial metals.
A study published in the academic journal Resources Policy in August 2026 conducted a quantitative analysis of 20 minerals involved in AI data centre infrastructure. The research found that copper accounted for 83% of the total mineral volume measured, while copper consumed in grid transmission and distribution accounted for 64% of total copper demand. This shows that the AI industry's demand for copper does not come only from servers and chip manufacturing 鈥?an even more important driver is the large-scale infrastructure needed to supply power to data centres.
Therefore, if Democrats push for stricter data centre approvals, power cost-sharing requirements, or environmental regulations that lead to some projects being delayed or even cancelled, the market may reassess the pace of AI infrastructure construction in the coming years and downgrade its expectations for copper demand growth.
However, a slowdown in AI data centre demand does not mean the long-term demand thesis for copper will be completely reversed. Global grid upgrades, the electrification transition, and new energy infrastructure construction remain important supports for copper demand. What the market really needs to assess is whether the growth rate of AI data centre investment will see a temporary pullback, and whether other end-use demand can fill the potential gap.
At the same time, the Trump administration's impending entry into a "lame-duck period" has also led the market to speculate that the possibility of expanding copper import tariffs is diminishing.
Previously, the prospect of the Trump administration imposing import tariffs on refined copper 鈥?which drove copper resources into the United States and distorted the global copper market's supply-demand balance 鈥?was an important reason copper prices remained at elevated levels. Since the US began considering tariffs on copper imports in early 2025, traders have exploited the price difference between the US and London markets to ship large volumes of copper to the United States in order to complete inventory positioning before potential tariffs took effect.
On Thursday, the copper price spread between the US and other markets disappeared.
TD Securities said in a report: "Many traders believe that with Democrats controlling the US Congress, the possibility of significantly raising copper import tariffs has now decreased."
Uncertainty over the US government's copper import tariff policy means the market may still be affected in the short term by changes in tariff expectations. If the US ultimately decides not to tax refined copper, or delays related measures, the US inventories that traders previously built up to avoid potential tariffs may gradually flow back to international markets, easing supply tightness outside the US and weakening the tariff premium embedded in copper prices.
Conversely, if the US ultimately decides to impose tariffs on refined copper starting in 2027, traders may once again accelerate the shipment of copper resources to the US to complete stockpiling before the tariffs take effect. This could not only further boost US inventories but also intensify supply tightness in other regions in the short term.
For the copper market, the impact of the US midterm elections is mainly concentrated in two areas: first, Democratic control of Congress could change the policy environment for AI infrastructure investment, weakening some market expectations for future copper demand growth; second, the reduced likelihood of the US expanding refined copper import tariffs could prompt copper resources previously attracted to the US by tariff expectations to gradually return to normal circulation.
However, the fading of the tariff premium does not equate to a fundamental reversal in the long-term supply-demand fundamentals of the global copper market. Copper mine supply growth, mine production disruptions, smelting capacity, and global electrification investment will still determine the medium- to long-term trajectory of copper prices. At the same time, AI data centre construction, grid upgrades, and new energy infrastructure investment may continue to provide sustained support for copper demand.
Therefore, what the market needs to watch next is not only whether the US ultimately imposes tariffs on refined copper, but also whether policies pushed by Democrats at the congressional and state levels will substantially change the pace of data centre construction, and whether the massive US copper inventories will flow back to international markets. These factors together will determine how much of the copper price premium previously driven by tariff expectations and the AI investment boom will dissipate.
Comments