The Trump administration says it will soon impose a 50% tariff on copper imported to the United States, adding another key manufacturing material to a growing list of items being targeted in trade wars. The massive taxes on foreign products continues the push to bring more manufacturing and production back to the U.S..
President Donald Trump said this past week his administration would soon be imposing a new 50% tariff on copper, though he left the exact details unclear. Commerce Secretary Howard Lutnick told CNBC the tariffs would likely take effect later this month or early August.
“The idea is to bring copper home, bring copper production home, bring the ability to make copper, which is key to the industrial sector, back home to America,” Lutnick said.
The White House has been looking into a copper tariff since Trump returned to office. It opened an investigation into whether reliance on foreign imports of the metal posed a risk to America’s economic and national security in February, a process it has also gone through for steel, aluminum and cars that have been hit with their own sector-specific tariffs.
Investigations into semiconductors, lumber and pharmaceuticals — which Trump hinted could get hit with a 200% tariff in the future — are also underway. All are separate from the so-called “reciprocal” tariffs he has placed on dozens of countries.
Copper is used in a wide variety of products from electronics, wiring, machinery and cars. The U.S. produces a majority of the copper it uses but still imports large quantities, primarily from Chile. According to the Commerce Department, the U.S. imported $17 billion worth of copper last year, $6 billion of which came from Chile.
Its prevalence in products, along with being found in wiring for electricity and pipes for water, means increased cost of foreign sources could be passed onto consumers.
“Copper can tell you about the economy, because it’s in a lot of things. If copper prices go up, everything’s more expensive, so that’s definitely a short-term concern, medium-term concern,” said Ian Lange, associate professor of economics and business at the Colorado School of Mines. “This is something that’s in everything, so it’s hard to see that having any positive impact on reducing inflation.”
Copper prices surged to all-time highs on Tuesday as commodity futures markets reacted to the tariff announcement. Prices eased on Wednesday but still remain nearly 40% higher since Trump took office.
The U.S. has large reserves of copper that can be mined and refined, but the administration has said America’s smelting and refining capacity is lagging other major copper producers like Chile, Australia and China. Most American copper production happens in Utah, New Mexico and Nevada, though there are smaller operations in the process of being built or getting operational in other places.
China has increasingly tried to dominate the global supply chain for copper with huge investments in mines and smelting, a strategy Beijing has taken with other critical minerals like lithium. The administration is also trying to combat that over concerns it could tamper access to crucial elements for future manufacturing and development. The Biden administration also placed an emphasis on increasing mining production in the U.S. focused mostly on critical minerals used in clean energy production.
“For the last 18 months or so, you’ve lost money refining copper, so I think the tariffs are kind of a response to that. It’s a way to maybe keep the two copper smelters that we have running so we don’t hit a scenario like we did for rare earths,” Lange said.
Demand for copper is expected to rise significantly in the coming years with long timeframes for new mines to go from discovery to production. While some of the new demand can be absorbed through recycling more used copper, there will be a need for more production and refinement over the coming decades.
Whether Trump’s tariffs will bring more production to the U.S. remains to be seen. Businesses have been in a holding pattern since he returned to office and unveiled a variety of tariffs only to delay or pull them back soon after.
Companies have been hesitant to make massive investments as they face uncertainty over where tariff policy will end up and on the overall strength of the economy. Copper is a product seen as an indicator of economic strength, as more demand for it indicates more manufacturing and building are happening.
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