President Trump’s announcement of a 50 percent tariff on copper imports is causing concern in some of the industries he says he wants to protect.
More than 40 percent of the copper used in the United States is imported, even though the country has large deposits. Mr. Trump has said that tariffs will help secure the supply chain for industries that are critical for national security, such as semiconductors, shipbuilding and lithium-ion batteries. But the announcement left many executives scrambling to assess the impact on their companies.
Copper futures hit a record Tuesday after the president said the new tax was imminent, and the price per pound is up more than 40 percent this year.
Businesses will either have to pass these higher prices onto customers or absorb them. Many of the same companies that need copper are already grappling with the tariffs that the Trump administration has imposed on steel and aluminum imports, as well as country-specific levies.
Mike Zimm, the vice president of marketing for Kris-Tech, a company that makes insulated copper wire used by utilities, solar farms and industrial construction firms, said he was shocked when he saw the price increase on Tuesday. “I was getting messages from my team, ‘Look what happened to copper,’” he said. His company, which imports thick spools of wire, quickly raised its own prices. “This jump is real and we are treating it as real. Prices will go up. They have to, to afford that cost.”
An increase in domestic production won’t happen overnight. It could take up to 10 years for some companies to change to a new supplier of copper and other high-grade minerals, according to the Aerospace Industries Association, a trade group that represents several defense companies. The group supports the Trump administration’s aim of moving more copper production to the United States, but it also said that trade agreements with big copper supplying countries should remain in place. Imports from those countries will be a critical part of American supply chains for some time.
“In the near term, we’re asking that trusted sources be made available,” Dak Hardwick, the association’s vice president for international affairs, said.
Other U.S. companies that rely on copper favor the trade arrangements — particularly a tariff-eliminating free-trade agreement signed years ago with Chile, a major copper producer — that have kept the metal flowing into the United States.
Demand for copper around the world has been bolstered by the rapid construction of data centers to power artificial intelligence systems. Copper is used in wiring and in large batteries needed to provide backup power to the storage centers.
Weapons makers, too, use a lot of copper, particularly in munitions. Copper, according to one analysis, is the second-most used metal by weight in U.S. defense production.
But mining and smelting copper in the United States can cost as much as three times more than doing so abroad. Copper is at the center of a geopolitical tug of war to secure critical resources as China increases its influence over the global supply chain. China has become the world’s largest processor and consumer of the metal.
Daniel Rosso, vice president of communications at Semiconductor Industry Association, a trade group, said tariffs could complicate the effort to build a globally competitive semiconductor industry. “As our companies continue to invest boldly in domestic chip manufacturing, we have concerns about any policies that could undermine that effort by making it more expensive to build chips in America,” he said in a statement.
In February Mr. Trump directed the Commerce Department to determine if copper imports threaten U.S. national security. Such inquiries, known as Section 232 investigations, usually have 270 days to conclude, so companies were expecting an announcement in November, not this week. There are no details yet on whether the tariffs will apply to all copper products, or only a subset, adding to the confusion.
“This is entirely antithetical to the administration’s stated desire for a reinvigoration of the U.S. manufacturing sector,” said Colin Grabow, an associate director at the Cato Institute, a research organization that favors free markets.
In a note, ING Group, a Dutch multinational banking and financial services firm, said that the administration’s attempts to raise domestic production of copper would probably fail, at least in the short term, because new mines take decades to build. Previous tariffs on steel and aluminum did not lead to increased domestic production of the two metals, it said.
Some American copper miners have plans to bolster domestic production, including Freeport-McMoRan, based in Arizona. But while Freeport hopes to double its U.S. output, the company also told the Commerce Department, in a comment letter, that expansions can take over a decade, in part because it takes time to determine how to best extract the copper and obtain permits. U.S. production is also more expensive, Freeport said.
Nonetheless, some chief executives were optimistic about tariffs increasing domestic production eventually.
“We believe that a battery supply chain in the United States that goes from the minerals all the way to the processing is the long-term future,” said Jack Perkowski, chief executive of Energy Supply Developers LLC, a company formed in 2021 to bring battery production back to the United States.
He said that copper accounts for a significant cost in the production of lithium-ion batteries. But virtually every material that a battery requires is imported from abroad, he said, incurring high freight costs and geopolitical risk. “If the United States starts producing more of the input for batteries, that’s going to be absolutely the best thing,” Mr. Perkowski said.
Mr. Trump’s copper tariff is likely to be a cause for celebration in Arizona, home to four out of five of the country’s largest mines. “We’re the copper state and Arizona has got a lot of copper projects that can come online and make the difference,” said Steve Trussell, executive director of the Arizona Mining Association, a trade group.
He said the Trump administration has removed roadblocks that have stymied the domestic copper industry, which is frequently tied up in litigation brought by environmental groups and Native American tribes. One particular project, Resolution Copper, which is said to have the potential to be one of the largest mines in the country, has been in and out of litigation for over a decade. The Biden administration paused it after Native Americans opposed it on the grounds that the land is considered sacred. But the Trump administration has pushed it forward, releasing an environmental-impact statement last month that would allow it to move to the next stage.
Still, even in Arizona, the impact of the tariff remains unclear. Some of the largest companies operating there also own mines abroad, making it more difficult for them to assess what the policy will do to their bottom line. A spokesman for Rio Tinto, which owns a mine in Utah that produces 20 percent of U.S. copper and a stake in a mining operation in Chile, said it was too early to comment on the impact of the tariffs because too many details remain unknown.
Peter Eavis reports on the business of moving stuff around the world.
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