The US President’s copper imports investigation has contributed to rapidly escalating global trade tensions. The metal is a vital component in a number of products, and is also important for the green transition.
Copper may be the latest metal to be potentially impacted by US president Donald Trump’s tariff threats. Trump has launched a probe into copper imports, which could be seen as a step closer to possible tariffs on the commodity.
The move comes as the US looks for more ways to increase domestic copper production. The metal is used in a wide variety of products such as wiring, appliances, electric vehicles, data centres and more. It is also a key component in the energy transition, being used in solar panels and windmills as well, which are vital for renewable energy.
Tariffs on the way for steel and aluminium
Earlier this month, Trump announced tariffs on global steel and aluminium tariffs, which are expected to come into effect on 12 March this year. He has also indicated plans to go forward with a plan to impose a 25% tariff on goods imported from Canada and Mexico.
Trump has also shared that he may impose reciprocal tariffs on individual countries, while having already increased tariffs on products imported from China.
This new probe into copper imports has contributed to escalating global trade tensions, at a time when trade relations between the EU and the US, as well as the US and China are already fraught.
Although the US government has shared that this move is needed to protect domestic copper companies from rising Chinese competition, it has still led to concerns of higher costs among businesses and consumers alike.
Peter Navarro, senior counsellor for trade and manufacturing to the US president, was quoted by the BBC as saying: “China has long used industrial capacity and dumping as an economic weapon to dominate global markets, systematically undercutting competitors and driving rivals out of business.”
China’s copper exports surge in 2024 on lagging domestic demand
China was the fourth largest copper producer globally, according to Statista, with Chile taking the top spot, followed by the Democratic Republic of Congo and Peru. China’s worldwide copper exports increased in 2024, following the country’s domestic demand flagging, which left considerable surpluses of the metal available for export.
This was mainly because of a slowdown in the country’s construction and manufacturing sectors, as China is still dealing with the lingering effects of a real estate slump seen in the last few years.
Weaker consumer sentiment due to the current geopolitical and economic situation has also led to consumers being wary of big purchases and investments, especially in sectors such as real estate, which are typically seen as riskier.
The top copper producing country, Chile, has also been facing a range of issues lately, including decreasing ore grades at mines such as Chuquicamata, as well as labour strikes and accidents. Increasing production costs and water shortages have also exacerbated these issues. These have all led to more concerns about the potential for copper prices rising in the coming months.