At this point, the so-called TACO trade has become a well-worn meme. A pejorative that stands for “Trump Always Chickens Out,” it describes the tendency of President Donald Trump to first issue a stern warning, then later walk back his own threats. This time around, Southern Copper Corp (NYSE:SCCO) has felt the immediate impact of the policy whiplash. Still, despite the political drama, SCCO stock could make for an intriguing idea for contrarians.
Initially, the Trump administration’s policies were supportive of rising share prices in domestic copper-focused enterprises. Early last month, the White House announced a surprise 50% import tariff on the key industrial metal — a dramatic boost from the 25% tariff announced previously. The shot fired across the bow sent demand surging for U.S. copper, which created an unusual arbitrage, with domestic prices reaching an over 25% premium relative to global prices.
However, earlier this week, the Trump administration issued another surprise: refined copper will be excluded from the sweeping 50% import tariff. Naturally, the move abruptly ended the months-long rally mostly sparked by trade restriction anxieties. In turn, Panmure Liberum analyst Tom Price bluntly assessed the matter. “Markets are now busily repricing refined copper much lower after Trump’s epic backflip on his own import tariff policy,” the expert remarked.
While this dynamic doesn’t look good for SCCO stock — which is down about 7% over the trailing five sessions and down more than 10% in the trailing month — it could open a discount in an otherwise fundamentally sensible trade. The harsh reality is that the expanding and modernizing global economy requires more copper, not less.
For example, a study earlier this year from the Society of Economic Geologists (SEG) warned that copper prices would need to more than double to effectively support the global energy transition. Further, with accelerating investments in artificial intelligence, data centers will inevitably expand. Such initiatives require copper — among other elements — which should bolster overall demand.
Identifying A Possible Asymmetric Edge In SCCO Stock
While the narrative …