President Donald Trump has initiated a new investigation into potential tariffs on copper imports as part of his ongoing strategy to reshape global trade norms. This move is intended to bolster U.S. production of copper, a metal essential for electric vehicles, military hardware, the power grid, and various consumer goods.
Key Highlights:
National Security Probe:
Trump signed an order directing Commerce Secretary Howard Lutnick to commence a national security investigation under Section 232 of the Trade Expansion Act of 1962. This is the same statute used during his first term to impose 25% tariffs on steel and aluminum imports.
A White House official indicated that the specific tariff rates would be determined through the investigation, with Trump expressing a preference for tariffs over quotas.
Trade Policy Shift:
This action reflects Trump’s broader effort to disrupt decades of support for free trade, which he has criticized for undermining the U.S. industrial base. His recent policies target both traditional allies like Canada and Mexico, as well as geopolitical rivals like China.
Since beginning his second term, Trump has issued numerous tariff orders, including a 10% levy on all imports from China and upcoming 25% duties on goods from Canada and Mexico.
Impact on Consumer Confidence:
Trump’s aggressive trade policies have contributed to a decline in consumer confidence, which recently experienced its largest drop in over three years. Households are increasingly concerned about rising inflation.
Wall Street responded negatively, with stocks falling for a fourth consecutive day amid uncertainty regarding Trump’s trade strategies.
Market Reactions:
Following the copper announcement, shares of Freeport-McMoRan, the world’s largest copper producer, surged by 5% in after-hours trading. The company produced 1.26 billion pounds of copper in the U.S. last year.
Conversely, Antofagasta, a London-based mining company, declined to comment on the situation but is facing challenges in developing its $1.7 billion Twin Metals project in Minnesota due to previous regulatory hurdles.
Targeting China:
Peter Navarro, a White House trade adviser, stated that the investigation would be expedited, highlighting concerns that China is using state subsidies and excess capacity to undermine competition in the global copper market.
The countries most affected by potential U.S. copper tariffs would likely include Chile, Canada, and Mexico, which were the top suppliers of refined copper in 2024.
National Security Concerns:
The White House emphasized the need to assess national security risks associated with U.S. reliance on imported copper, noting that the U.S. imported 45% of its copper consumption last year, a significant increase from the early 1990s.
The investigation will cover a range of copper products, including raw mined copper, copper concentrates, alloys, scrap copper, and derivative products.
Future Demand:
Officials warned of a looming copper shortage driven by rising demand for electric vehicles and renewable energy technologies. They stressed the necessity of establishing a robust U.S. copper smelting and refining capacity, which requires long-term trade protections.
Digital Services Tax Accountability:
During the signing, Lutnick also announced plans to hold countries accountable for imposing digital services taxes on U.S. tech firms, indicating that the administration would revive tariff investigations into these taxes.