Trump’s Tariffs on Copper Could Turn into an Own Goal

This past week, President Trump announced that the U.S. would be imposing a 50% tariff on copper imports. The tariff, which will come into effect on August 1st, is meant to encourage the domestic mining and smelting of the red metal. 

It is yet to be clarified what products are included in the tariff, as the industrial metal is crucial in the manufacture of electric vehicles, semiconductors and military hardware, as well as various consumer goods. 

Additionally, the Trump administration hasn’t revealed whether there’s room for lower rates or exemptions for major suppliers to America like Chile. 

Experts argue that it will be tough for America to achieve any substantial expansion of copper mining and production both in the short and long term. They explain that while copper miners like Rio Tinto and Freeport McMoRan could boost their output and increase ore supply in the short-term, it would be unsustainable in the long-run. 

Last year saw the country’s imports of refined copper metal hit 810,000 metric tons, with figures showing that it generates a little over 50% of its yearly demand domestically. During the first half of this year, the U.S. imported over 880,000 tons of copper, which is significantly higher than its 441,000-ton requirement. There is a massive amount of stockpiled inventory. 

Importing ore for local refining is not a likely solution either as recommissioning shut down smelters would take capital as well as time. The only feasible option is the Asarco smelter in Arizona, which has been out of operation for more than 4 years. 

Currently, several new mines are under development, the largest being the Resolution Copper mine in Arizona, which is currently stalled due to legal disputes with the indigenous Apache tribe. While a recent ruling by the Supreme Court seems to remove obstacles to the mine’s development, it will still be several years before any copper is produced. 

During this period, America will continue to rely on imported copper, leaving buyers with few viable alternatives. As a result, auto-manufacturers, construction firms and electronics producers will most likely bear increased costs as local copper prices will increase to match the cost of imports. 

Whether these extra costs are absorbed by companies or passed on to customers will depend on how much influence those firms have in the market. 

Overall, this could lead to higher inflation if the added costs reach consumers, or reduced employment and investments if businesses follow Trump’s advice and absorb the tariffs themselves. It is expected that the tariffs will also influence global copper prices and market trends in the short and long run. 

Exploration firms like Torr Metals Inc. (TSX.V: TMET) with a focus on copper deposits in Canada may now have to weigh the viability of the American market in light of these new import tariffs on the critical metal. 

NOTE TO INVESTORS: The latest news and updates relating to Torr Metals Inc. (TSX.V: TMET) are available in the company’s newsroom at https://ibn.fm/TMET 

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