Why Markets Went Crazy Over 50% Copper Tariffs

On today’s Big Take podcast: What Trump’s 50% copper tariffs could mean for consumer electronics, cars and the US military.

Copper wire unspooled in Santa Teresa, New Mexico. Photo by Justin Hamel /Bloomberg

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Last week, President Trump sent markets into a tizzy, when he proposed tariffs on one of the world’s most valuable commodities: Copper. 

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On today’s Big Take podcast, Bloomberg’s economic statecraft reporter Joe Deaux joins host David Gura to discuss the president’s ongoing push to bring copper manufacturing back to the US. Why 50% levies on copper could affect everything from your car and iPhone to the nation’s electrical grid, and what the copper industry is doing to get ahead. 

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Here is a lightly edited transcript of the conversation:

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David Gura: The United States’ trading partners are trying to navigate a global trade landscape that is being radically reconfigured by the Trump administration. Over the weekend, President Trump announced a 30% across-the-board-tariff on imports from Mexico, and a 30% tariff on imports from the European Union. It comes on the heels of another major trade announcement. Last week, President Trump held a cabinet meeting at the White House. Now, this is something his predecessors did behind closed doors. But Trump beckoned in reporters, with their cameras and their microphones. 

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Donald Trump:  You could leave the cameras there. That’s fine…

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Joe Deaux:  Trump is a fairly accessible individual. 

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Gura: Joe Deaux reports on mining and metals at Bloomberg, where his beat is “economic statecraft.” 

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Deaux:  I’ve covered steelworkers for almost the entirety of my career and he will like, go to a mill and just like chat with the guys who work the shop floor, and then he’ll also like talk to the billionaire CEO, and it’s like an incredible talent. So, he invited the press into this Cabinet meeting. And somehow the question of copper tariffs came up. And we haven’t heard about copper tariffs for a long time, and he hasn’t said anything about him in a while. And so this time he just said, yeah, we’re doing copper tariffs.

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Trump:  I believe the tariff on copper, we’re gonna make it 50%. 50%.

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Deaux: And the market went wild.

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Bloomberg TV:   US copper futures surge to a record. After President Trump says he’ll put a 50% tariff on the metal—

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Bloomberg TV: There’s now a sort of scramble to get metal from the rest of the world to US destinations before the tariffs kick in…

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Deaux:  Copper prices rose in New York by 17% at one point. I mean, I’ve covered copper for a decade. I’ve never seen a 17% move in copper prices.

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Gura: Joe says he looked up copper prices on the Bloomberg Terminal, hoping to find out the last time prices rose by this much.

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Deaux:   It gave me an answer which was in a gray color, which means it only knows going back to data from 1988 that it’s never been that much of a move.

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Gura: The reason for that move is copper is everywhere. And a change in how its priced could upend everything – from the production of cars and electronics, to the construction of homes and offices and military installations.

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Gura: I’m David Gura, and this is the Big Take from Bloomberg News. Today on the show: The anatomy of a tariff. What President Trump’s decision to target a key commodity reveals about his evolving approach to trade and how a renewed push to return to America’s industrial past could dampen its economic future.

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Gura: To understand why this new copper tariff has rocked markets, take a second to think about how much of what you use every day includes it. 

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Deaux:  It’s all over your house, because every electrical outlet is connected to wiring, and all wiring is copper wiring in your house. 

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Gura: Bloomberg’s Joe Deaux says it’s in electronics, wires, and cars.

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Deaux: It’s in every skyscraper.  These microphones. It’s in every computer. Automobile. iPhone.

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Steve Jobs:  These are the first processors using copper technology that will ever be shipping in a product.

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Gura: That’s Steve Jobs, in 1999, announcing a new line of Apple computers.

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Jobs: So we are extremely happy. These things are speed demons…

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Gura: Copper is in the rivets on Levi’s jeans.

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Levi’s ad:  Those fashionable copper rivets…

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Gura: There was a time, many decades ago, when much of that copper came from the US of A. Chevrolet boasted about that, in this film the car company produced in the 1950s: 

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American Harvest:  Copper from Utah and Montana. From Michigan and Wyoming…

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Deaux: Copper is one of those industries where the United States was a dominant producer of what it domestically consumed.

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Gura: But as the world became increasingly electrified, demand for copper shot up. And US producers couldn’t keep up with that demand. So, they turned to other countries to help fill the gap. Today, more than 40 percent of the copper the United States uses is imported.

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Deaux:  Chile is like the copper producing country in the world,  And like with all mineral resources, there’s just like luck. Like the United States sits on a lot of oil. That’s lucky. Chile sits on a lot of copper, and for them that’s lucky. The grades are depleting, but it had been very high grade where you can just scrape it off the top of the earth and easily pull off the rock part and get the copper and send that off as, as a product.  So the United States one, you have your own depleting copper ore bodies. There is a surge of demand, right? As globalization really takes hold, uh, you realize there’s far more that you need to make, than was previously expected. And so if you can’t do it, you look elsewhere and you say, well, great. There’s this fairly great trading partner in Chile. They do some good stuff. Canada are wonderful too. Mexico, other parts of the world. You say, okay, well they’ll fill in what we can’t produce. And so you realize at some point that you can’t be the sole distributor of that. And that’s okay.

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Gura: But it’s not okay with President Trump. Joe says it’s hard to know why the president has decided to focus on copper now. But this is part of what’s motivating him. 

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Deaux:  The president of the United States has made clear for both of his terms that he wants onshoring of manufacturing in the United States of America—

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Gura: Bring it back.

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Deaux: Bring it back. Come back to America, and Make America Great Again really is about a period of United States history of manufacturing that’s like really like 1950 to like 1979, right? Like Buffalo’s a great example. The peak population of a city like Buffalo was in the 1950s. So the president hears, hey, this was an industry that we were once dominant in. And he probably thinks, well, why can’t we be that again?

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Gura: So Trump announced this 50% tariff on copper imports – writing on Truth Social quote: “This 50% tarrif will reverse the Biden Administration’s thoughtless behavior, and stupidity. America will, once again, build a dominant Copper Industry.” The thing is boosting US copper production is unlikely to be easy. 

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Deaux:  I can tell you it takes 10 to 20 years get a mine from, ‘okay, here’s the deposit’ to, ‘we’re now rolling off commercial scale copper to the biggest wire companies in the United States.’

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Gura: Take a mine out in Arizona, called Resolution Copper, as an example. It assumed control of the historic Magma Mine in 2004 and began the permitting process about 10 years later:

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Deaux:    It has faced so many hurdles. It’s a copper owned by Rio Tinto and part owned by BHP.

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Gura:  Big conglomerate.

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Deaux:   The, the two biggest miners on planet Earth. So this is a very serious deposit. If that mine were to start tomorrow and it won’t, it would be able to push out the equivalent of one quarter of US demand of copper just from that mine. So it’s a big deal. And it is still trying to get to production. 

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Gura: Here’s the CEO of Rio Tinto, on Bloomberg Television last year: 

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Bloomberg TV: You’re still dealing with just the permitting of this project. When could we actually see it working?

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Jakob Stausholm: [Laughs] It’s a long  process… So we are talking towards the end of, uh, of, of the decade, uh, that we can have production.

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Deaux:  And that’s the problem with mines. President of the United States says, ‘Do this now.’ That’d be great. But you have permitting processes, and even if the president of the United States were to just completely obliterate the permitting processes. You also have communities.  Resolution has had so much trouble getting up off the ground because it is built next to an indigenous sacred site. And that’s just one example of the fights you will face. It doesn’t matter if you’re on a red state or a blue state. You do not like mines or big manufacturing facilities in your backyard?

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Gura:   Nimby. Not in my backyard—

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Deaux: Not in my backyard.  And like, this is not just like an American thing, this is people, NIMBY in particular to industrial activity is everywhere. And  there is no expert in this space that I have spoken to who thinks these tariffs will go into place and suddenly you’re gonna see copper mine projects coming up on the list. You’re probably just gonna have a situation where Freeport-McMoRan and Rio Tinto continue to produce in the United States at the same pace that they have, maybe a little bit more, and you’re going to remain dependent on half of your copper coming from outside the country and that copper will be more pricey, and then we deal with the fallout.

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Gura: Fallout that has already started. There are three different categories of copper: raw copper, refined copper, and semi-finished copper products—things like wires, metal sheets, tubes and plates. And the president’s announcement immediately raised questions about what would be tariffed.

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Deaux: Are you getting a tariff on raw copper? Are you getting it on semi-fabricated products like wire and tube and copper faucets?

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Gura: Nerd out, if you need to.

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Deaux: Totally. Right? And then like, what about scrap?   Because you know the least cost ton to make new copper is scrap copper. It’s a great thing about metal. Like you just, once you’re done with it, you pull it out, you can remelt it down to molten liquid and then you can recast it with other copper and it’s new copper.

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Gura: Joe says the president has answered some of those questions. He’s reported those 50 percent tariffs will include both refined and semi-finished copper. Refined copper is widely used in electrical grids, construction, car manufacturing and consumer electronics; while semi-finished copper is important to the military-industrial supply chain. After the break, Joe explains how copper suppliers are rushing to beat the president’s August 1st deadline. Plus, what this tariff tells us about how the administration plans to approach tariffs on other sectors. 

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Gura: In the past week, as news about President Trump’s copper tariff has thrown producers and traders for a loop, we’ve seen some winners emerge: commodity traders, miners and banks that have managed to ship copper to the US ahead of August 1st, when the tariff is scheduled to be put in place. The value of the metal has skyrocketed. Some traders have described getting more than $1,000 on every ton of copper, which is more than ten times what it usually goes for.

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Deaux:  I talked to one of my shipping sources and they said, you heard about Hawaii, right? You heard about Puerto Rico, right? And I was like, oh, uh, well, what do you mean? He goes, people are already shipping metal on the water, on boats to those locales because they can’t get to the mainland or they’re concerned they won’t get to the mainland in time. And I said, well, it like, is that a problem? And the best answer he gave me was, well, think about it. Not every harbor or not every dock is prepared to handle copper. And why is that important? Because copper is one of the most valuable products that thieves like to take out of warehouses. 

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Gura: Is that right?

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Deaux: Yeah.  Like you hear every, I feel like every few years there’s a story that comes out that’s like the copper from X was stripped out of this thing and you know, it was a big heist and somebody made a lot of money off of it.

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Deaux: Copper per pound is at about $5.50 and if you can strip it out or if you can steal it in cathode form, you’re gonna make a pretty penny. And so he said, listen, the guys in Hawaii don’t handle copper imports. So one of the struggles that shippers and brokers are going to have to do is call up the dock and say, you have to handle this with care, and there has to be security around this copper because it’s gonna be sitting in your port for X period of time.

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Gura: That copper is already piling up in port cities like New Orleans, which is getting increasingly close to capacity. The sudden push to get copper to the US as quickly as possible has also left places like China with dangerously low inventory. It’s just the latest example of how the US president’s actions have caused turmoil in the global economy. And in that same Cabinet meeting last week, President Trump previewed another tariff announcement in a way that seemed off-the-cuff. 

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Trump: We’ll be announcing something very soon on pharmaceuticals. Uh, we’re gonna give people about a year, a year and a half to come in, and after that, they’re gonna be tariffed. If they have to bring the pharmaceuticals into the country. The drugs, and other things into the country, they’re gonna be tariffed at a very, very high rate, like 200%.

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Gura:  I asked Joe what we know about how those tariffs, on pharmaceuticals, could play out, and how they’re part of a broader strategy when it comes to “sectoral tariffs” – levies that aren’t specific to countries, but whole sectors. 

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Deaux: I was talking to a trade lawyer, some weeks ago who said, look at pharmaceuticals and copper and rare earths. And these are all the Section 232s – among many others right now, lumber – that are being researched by the Commerce Department.

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Gura:   And these are tariffs that the president could put in place on national security grounds?

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Deaux:  Correct.  That’s exactly right. The law passed during the Kennedy administration back in 1962. This trade lawyer said, we call these the problem child trade issues. There’s a reason Trump didn’t touch all of these with Section 232 during his first term, he only did steel and aluminum. And that’s because steel and aluminum are actually pretty easy to fit into that law, which is there’s a national security importance to those two different products. 

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Gura:   Gotta build ships—

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Deaux: Yeah.  That’s pretty straightforward. Like steel is steel and aluminum is aluminum and like it’s, it’s easy to implement. But pharmaceuticals  and lumber and copper are, far more complex.  And I think the struggle right now inside the Commerce Department is they’re trying to get it right. They’re trying to figure out how they get around these nuances and I think the career officials are, are saying there’s, it’s, it’s just not one number. It’s just not one policy that will solve this issue.

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Gura:  Is there a commensurate amount of fear in that industry to what we’re seeing in the, the metals industry as well about what that would mean if you saw 200% tariffs on pharmaceutical ingredients?

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Deaux:  Right. Yeah. One of these trade sources told me is like, do you think Pfizer really wants to worry about producing generic drugs? Like, no, they don’t. It’s low margin. They’ll lose money making these things and like it, there’s a reason, this is like so many other things. Why did X industry go abroad, you know, to India or to China or, or wherever it might be? Well, because smart people in the United States said, it’s just not worth it for us to do this thing anymore. There’s no profit there. Or if there is a profit, it’s, it’s such a slight margin that we feel like we’re wasting our time and our shareholders’ time.

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Gura:  Could you talk about the broad strategy here? There’s been so much focus in recent weeks on these country by country trade policies. We’ve seen the letters, we’ve heard the president’s threats,  and now we have these sectoral tariffs. How does that fit into the president’s broader trade strategy? Is it, is it being forced in effect by this court decision that we saw a few weeks ago that by using this Section 232, this national security law. They’re in effect, easier for him to, to put in place and have confidence that they’ll, they’ll stay in place?

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Deaux:   That’s absolutely correct. I spoke to Wilbur Ross, the former commerce secretary under Trump’s first administration, some months ago right when the president took office. And I asked him like, is Trump gonna go ahead with tariffs? And Wilbur Ross said, the president knows he can use Section 232 tariffs and Section 301 tariffs, and the courts won’t stop him because the courts already heard the cases in Trump 1.0 and said, yes, 301 and 232 are written into US law and allows the President of the United States to utilize these on grounds of national security.

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Gura: Joe says it’s hard to say how is going to play out – and if these tariffs will actually have staying power: 

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Deaux:  Once the tariff is implemented, how does it actually affect, purchasing, how does it actually affect potential inflation? How does the president and his team react to that and where do they feel generous in giving some sort of break or the opposite.

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