US industries bracing for copper tariffs

US businesses could soon see a rise in the price of copper sourced from countries, including China, experts warned, as imports into the United States face a 50 percent tariff beginning Aug 1.

The US produces just over half of all the copper it uses. Most of the rest is imported from three countries — Chile, Canada and Peru — which made up 90 percent of all copper imports into the US last year. Meanwhile, China is among the major producers in the global market, but is not a major direct supplier of refined copper to the US.

An economist warned that the proposed tariff hike will likely raise the price paid by construction sites, power grids and factories as it is essential for electric vehicles, house building, data centers, consumer goods and more.

"High tariffs are needlessly raising the costs of raw and intermediate inputs that contain steel, aluminum, copper and lumber," Thomas Fullerton, a professor of economics and finance at the University of Texas at El Paso, told China Daily.

In February, President Donald Trump's administration began a Section 232 investigation into copper imports. This rule allows the president to impose a tariff on imports if it poses a threat to national security.

The investigation found US copper imports do threaten the domestic industry, and so higher tariffs were deemed justifiable.

"Copper is necessary for Semiconductors, Aircraft, Ships, Ammunition, Data Centers, Lithium-ion Batteries, Radar Systems, Missile Defense Systems, and even Hypersonic Weapons, of which we are building many," Trump wrote in a post on his Truth Social platform in July.

Triggering anxiety

However, anxiety over the fine print in the tariff policy has gripped the global $269 billion copper industry, according to the world's largest copper producer, Codelco.

With less than two weeks to go, the producer said that it is still not known if the levies will apply to semifinished ore, refined metal or copper ore. "Our customers have some anxiety and they need to understand where all this will end," Maximo Pacheco, chairman of Codelco, a state-owned Chilean copper miner, told the Financial Times.

The US imported over half of all its copper in 2024, bringing in an estimated 810,000 metric tons, the US Geological Survey found.

Overall, the Trump administration's proposed levies on copper are aimed at boosting domestic production. Chile, Canada and Peru, which all have trade deals with the US, argue their copper production is not a threat to the US.

Over two-thirds of all domestically refined copper is mined in Arizona. A large new mine planned by Rio Tinto and BHP has been in the works for over a decade, but is yet to materialize.

Shortly after the probe into the copper industry was announced, Western commodity traders — who usually help to sell copper globally — began facilitating the buying of the metal in very large amounts from China, Bloomberg reported.

As these companies created an environment to help clients get ahead of any tariffs, shipments of copper began arriving on US shores. By March, a reserve of hundreds of thousands of tons of copper had been created in many US ports.

Over 230,000 tons of copper have been shipped into US ports since earlier this year, Bloomberg reported.

A surge in copper prices will create "higher costs and thinner margins for American companies," Bloomberg reported, especially when combined with the existing tariffs on steel and aluminum imports.

While the US produces some copper ore, it does not have a huge smelting capacity to refine the material it uses.

Last year, China had dozens of copper smelters operating, whereas the US only had two to three primary copper smelters, according to the US Geological Survey.

It is yet to be seen if the copper levies will go into effect as planned, as the Trump administration has had an on-again, off-again approach to tariffs this year.

Charles Bareijsza, president of Metal Associates in New Jersey, which sells copper products such as wires, sheets and pipes, told Bloomberg: "Unfortunately, we have to pass the increase to the customers …I called our largest customer and I said to them, 'Be prepared.'"

belindarobinson@chinadailyusa.com