If one assumes that tarriffs in this instance behave in the same manner as supply bottlenecks while the fiscal impetus is still in play that is governments continue to spend, which is likely even the frugal Germans are releasing deficits than we have stagflation. Copper along with base metals does not behave in a pro-cyclical manner in this instance. Chart below shows the long term price of Copper, hint - look to the 70's (i.e. Vietnam and other supply shocks). I see this is the more likely macro scenario ON A BALANCE OF PROBABILITIES. Tarriffs along with lower income taxes and higher spending = higher input costs and higher for longer inflation. This is good for both base and precious metals.
Alternatively (and I weigh this as low probability), a beggar thy neighbour approach takes place and mutually assured destruction that leads to deflationary trap (this would require governments to be fiscally conservative as well). Than we have a great depression scenario (Smoot-Hawley).
Conclusion - stay bullish on commodities. Though with the caveat that there will be shorter term fluctuations. One can only assume that copper will fall in the immediate short term after the front-running on Comex that took place.
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