[NEW YORK] US President Donald Trump imposed a 50 per cent tariff on all semi-finished copper products coming into the US, but stopped short of applying the duty to imported refined copper, sparing domestic industries from potential higher costs.
Prices of the metal fell as much as 20 per cent, after Trump on Wednesday (Jul 30) issued a proclamation setting fresh copper duties, the biggest intraday drop since at least 1988. That signalled the global market dramatically readjusted its prior expectations on the scope of Trump’s plan.
The new rates become effective Aug 1, according to a White House fact sheet. Much of the US market had anticipated at least some tariff on raw copper, the key input for wiring and other products that are ubiquitous for the homebuilding, construction and automobile industries.
The copper levies, which come under Section 232 of the Trade Expansion Act, will not stack on top of separate levies on automobile imports, which Trump put in place earlier this year, according to the White House.
If a product is subject to auto tariffs, the import tax on vehicles will apply and not the copper duty, the White House said.
Trump took the rare step of invoking the Defense Production Act, a Korean War-era law that allows the president to direct industries to boost production of materials critical to national security, to require that 25 per cent of high-quality copper scrap and forms of raw copper made in the US be sold domestically.
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The percentage of certain raw copper materials mandated for US sale would increase to 30 per cent in 2028 and then 40 per cent in 2029. The White House said the move is necessary to “boost US refining capacity by ensuring low-cost inputs while domestic refiners grow their operations”.
The proclamation officially setting Trump’s policy comes three weeks after he announced the US would levy 50 per cent tariffs on copper imports from Aug 1, without providing specifics on what products would be covered.
Since then, an expansive lobbying campaign played out in Washington, with US copper producers, semi-finished products makers, scrap yards and foreign governments angling for measures that would benefit their industries, whether it be exemptions, punitive tariffs or a complete abandonment of the tariff.
Making copper a top trade priority came as a surprise to the global market, since Trump during his first term, focused duties on steel and aluminium. Copper producers, traders and consumers at the time were relieved that they avoided tariff-related upheaval.
Putting the red metal in the cross hairs this time initially caused prices in New York to surge, and traders made profits of a lifetime by shipping massive volumes of the metal to the US before duties took effect.
Excluding copper ore, concentrates and refined cathodes, among other products, spares the copper-consuming market of what was widely expected to be a surge in their input costs.
It gave reason for buyers to breathe a sigh of relief, as the decision comes at a time when the US and the rest of the world expect a dramatic surge over the coming decade in demand for the industrial metal. Data centres, automobile companies, power companies and others are couring the globe for necessary feedstock to increase electric-vehicle and electric-grid capacity. BLOOMBERG
