The President Donald Trump announced that all semi-finished products of copper entering the United States would be subject to a tariff of 50%. This surprised the market because it excluded refined copper.
According to the White House Fact Sheet, the proclamation issued on Wednesday will take effect August 1.
Market participants had anticipated the tariffs for raw copper. Copper is used in a wide range of products, from auto parts to electrical wiring.
The new tariff was a much smaller scale, which helped many manufacturers who rely on imported refined copper to avoid increased costs.
The announcement caused a sharp drop in copper prices, which fell by around 19% and reached $4.53 a pound as of the date this article was written.
Section 232 (Trade Expansion Act) allows for tariffs on the basis of national security. The Trump administration had already imposed trade measures on aluminum and steel.
Defence Production Act invoked for boosting domestic supply
The Defense Production Act, a law that dates back to the Korean War and was passed by President Trump, has been invoked to make sure there is enough copper for the domestic market.
According to the order, 25 percent of the high-quality scrap copper and raw copper produced by the US will be sold in this country starting next year.
This percentage will increase incrementally, to 30% by 2028 and 40% by 2029.
The White House claims that the goal is to increase the refining capability of the US by providing a steady supply of inputs at low prices.
The goal is to reduce the reliance on copper imported from abroad, especially since copper continues to be a key input for infrastructure, electronic, and defence systems.
The new tariff will not double tax products that are already subject to tariffs, such as the auto imports under Trump’s previous duties.
According to the White House, if a product containing copper falls into both categories, the only tariff that will be applied is the auto duty.
Economic concerns and market impact
Analysts have voiced concerns about the wider economic impact of the tariff. The administration has described it as a way to address trade imbalances, and support American industry.
The Tax Foundation warned that ongoing tariffs across sectors–including those on autos, lumber, and pharmaceuticals–could slow US economic growth.
The third most widely used industrial metal in the world, after iron and aluminium, is copper.
According to US Geological Survey, the US imports almost half its copper, and Chile is by far the biggest source.
The tariff could lead to higher costs for copper products.
This includes not just infrastructure, but also automobiles and consumer electronics.
The copper tax is set to come into effect August 1 and stakeholders in all industries need to prepare for the ripple effects on pricing as well as supply chain dynamics.
The post Trump imposes a 50% tariff on imports of semi-finished copper, spares refined Metal may be updated as new developments unfold.
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