The US industrial sector faces significant costs if potential tariffs on copper imports come to fruition, according to analysts. The move, launched by President Donald Trump, aims to rebuild domestic production but may have the opposite effect due to the lengthy process of reviving mining and refining.
US prices for copper have already increased, causing concerns about dampening industrial activity, curbing consumption, and forcing companies to switch to aluminum instead. The US imports nearly half of its copper needs, with Chile, Canada, and Mexico being the largest suppliers.
Analysts warn that the US lacks sufficient production capacity, citing a 11% decline in copper mine output since 2021. With only two operating copper smelters, restarting one is no guarantee of success due to permitting challenges and lengthy construction times.
The premium on COMEX prices over international benchmark prices surged to $816 per metric ton, but experts say this may not be sustainable. Development of new mines, such as the massive Resolution Copper mine in Arizona, is also on hold due to opposition from Native Americans.
A prolonged period of high copper prices could have a significant impact on the US industry, making it essential for companies to diversify their supply chains and find alternative materials.
Source: https://www.reuters.com/markets/commodities/potential-us-copper-tariffs-seen-costing-domestic-industry-dearly-2025-02-26