Former President Donald Trump declared his intention to impose a 50 per cent tariff on copper imports during a recent cabinet meeting. This announcement is an important piece of his overall trade strategy. To see how this single rule will dramatically affect the U.S. trade relationship with Canada, read on. While the tariff has not yet taken effect, it raises questions about its potential impact on the copper market and the industries reliant on this metal.
In making his announcement, Trump stated, “I believe the tariff on copper, we are going to make it 50 per cent.” He added that national security concerns led to this decision. To do so, he relied on Section 232 of the Trade Expansion Act of 1962 to launch investigations into copper imports. We want to ensure that we are reinforcing domestic production. This is critical to bolstering our independence from foreign sources, including Canada, one of the top copper ore exporters to the United States.
Economic Impact of the Tariff
The proposed tariff is notable as Canadian exports of copper and copper-based products are currently flourishing. In 2023, these exports were valued at an impressive $9.3 billion dollars. Indeed, over 50% of these exports flowed to the materials U.S. market. This is a bracing indication of just how intertwined the economies of the two countries have become. Exports of copper ores and concentrates just from Canada have this year already hit $3.4 billion.
Mining Association of Canada CEO Pierre Gratton, for one, refuses to be daunted by the figures. He thinks that Canadian mining companies won’t face significant obstacles from the tariff. But he said that the Canadian copper refineries in particular could be hit harder. The imminent tariffs will put supply chains in disarray and increase expenses for American consumers. The domestic production of the U.S. supply chain just can’t produce enough right now to meet skyrocketing demand.
The market absorptive quickly enough to that Copper prices jumped the Donald’s announcement by 11.7 per cent to $ 5.85 per pound. Further, shares in U.S. mining company Freeport-McMoRan jumped 4.6 per cent on the announcement. For example, take this illustration of how quickly and deeply investor sentiment can swing with the trade policy news cycle.
Future Considerations
As of this writing, Trump has not set a starting date for the copper tariff. None of that amounts to the potential damage to U.S.-Canada trade relations that this bill’s implementation would cause. Minister of Innovation, Science and Industry, François-Philippe Champagne has expressed the importance of a co-ordinated approach between jurisdictions. He stated, “A co-ordinated approach across jurisdictions would send a strong signal of unity and reinforce Canada’s resolve to secure fair treatment for our businesses and workers.”
He encouraged other countries to “take meaningful steps to implement similar policies in your jurisdictions.” This is indicative of worries that separate, unilateral tariffs would trigger retaliatory action and make international trade relations even messier.
After all, during his first administration, Trump was a key architect of a far-reaching, WTO-illegal global tariff regime. These Section 232 tariffs on copper are more targeted. The former president had previously hinted at implementing across-the-board new tariffs. We hope his administration will take protective, expansive action in other spheres.
