Recently, former President Donald Trump announced his own plans to impose a 50 percent tariff on U.S. copper imports. This paradigm-shifting decision has recently roused both excitement and anger within industry circles. The tariff is the first step of a broader strategy to increase domestic copper production. Yet the United States is more than 90 percent reliant on imports for many of those metals, importing nearly half of its copper requirements annually.
Freeport-McMoRan, one of the largest copper mining companies in the U.S., would benefit from the proposed and welcomed tariff. The company has raised huge alarm bells over the potential effects to the global economy. Freeport-McMoRan calls on the Trump administration to increase domestic copper production. They feel this type of approach is preferable to the imposition of tariffs that would upend the international trading system.
Countries like Chile, Canada, and Peru are some of the US’ largest copper suppliers. These countries have unequivocally told the Trump administration that their exports do not threaten U.S. national security interests. They are fighting to get tariffs on these goods exempted. The proposed tariffs may increase tensions with the U.S.’s largest suppliers. They supply the high-purity, high-conductivity copper and copper alloys—and other advanced copper products—that are vital for America’s advanced industries.
The copper announcement comes on the heels of a Section 232 investigation into U.S. imports of copper that was opened by the Trump administration back in February. The probe can’t linger past this November. The possible start date for tariffs, first revealed by Commerce Secretary Howard Lutnick, would be late July or August 1.
“I believe the tariff on copper, we’re going to make 50%.” – Donald Trump
Freeport-McMoRan would stand to receive a competitive advantage with less competition from foreign imports. They fear the negative consequences tariffs could have on U.S. companies that rely on copper to manufacture and produce their own goods. A 50% tariff will only succeed in increasing costs for these small businesses. This would only increase consumer prices and make them less competitive in the global market.
According to industry experts, the U.S. has effectively imported a year’s worth of demand in the past six months alone. That unexpected boom has local storage levels brimming. Ole Hansen, an industry analyst, remarked on this situation, emphasizing the current surplus:
“The U.S. has imported a whole year of demand over the past six months, so the local storage levels are ample.” – Ole Hansen
Freeport-McMoRan and other industry stakeholders are crying wolf over the growing supply shortage. They caution that relying solely on tariffs could prevent long-term domestic copper production from growing enough to meet expected demand. It would be a long road for the United States to independently meet its copper needs. Recent, though entirely deserved, opposition to big copper projects nationwide has only turned up the heat on this kettle.