Western mining companies are unimpressed: Trump's tariff on copper will only consolidate China's dominant position

US President Trump announced that starting August 1, a 50% tariff would be imposed on imported copper. Although the US has repeatedly claimed that this will promote the development of the US metal processing industry and reduce dependence on China, the UK's Financial Times reported on August 5, citing statements from several Western mining executives and analysts warning that this policy may backfire, not only failing to stimulate the improvement of US domestic smelting capacity, but also further strengthening China's leading position in global copper smelting.

The White House announced on July 30 that a 50% tariff would be imposed on semi-finished copper products such as copper tubes, copper wires, and copper cables, but refined copper metal would not be included in the tax, which shocked the market.

According to data from the International Copper Study Group in 2023, China accounts for more than 50% of global copper smelting production.

The United States is the second-largest copper consumer in the world after China, but its production accounts for only 5% of global supply, and its processing volume accounts for only 3%. Approximately 45% of US demand is met by net imports (net imports refer to the situation where imports exceed exports during a certain period), and these imports mainly consist of processed copper ores.

Trump's executive order issued last week stated that the tariff was imposed because "the US copper production facilities have continued to face the threat of further closure," coupled with so-called "unfair trade practices" abroad draining the US refining and smelting industries. Mining executives and analysts pointed out that a copper tariff alone is insufficient to incentivize the construction of new copper smelters in the US. Copper smelting is an energy-intensive industry, and China has already invested heavily in this area, while the US currently has only two operational smelters, whereas China has dozens.

After the details of the tariff were announced, Duncan Wanblad, CEO of the global mining giant Anglo American, said that the cost of building a copper smelter in the US is "far higher than average."

"In the end, we will only exacerbate inflation globally," he said.

"Tariffs are a form of self-harm," said Andrew Forrest, chairman of the Australian mining company FMG and a billionaire, who also stated that these tariffs would "hinder the development of North American manufacturing" and lead to "loss of jobs and industries."

Although the US produces some copper ore, its refining capacity is far from meeting domestic copper demand.

Kathleen Quirk, president and CEO of US copper company Freeport-McMoRan, said in a July earnings call that "don't expect the US to quickly increase refined copper capacity." She pointed out that building a new smelter in the US is "very difficult," which is a long-term investment.

European aluminum company Norsk Hydro also expressed the same concerns, stating that "tariffs may come quickly and go quickly," and companies cannot make investment decisions to build new smelters based solely on tariffs.

The report states that due to the strong competitiveness of Chinese smelters, some smelters have been forced to close, and others even willing to pay to process ore to maintain operations, as once the facilities are shut down, it is difficult to restart them.

A senior executive said that if smelters outside of China have to pay additional fees for ore, "it will be even harder to survive."

Original article: https://www.toutiao.com/article/1839626919265415/

Statement: This article represents the views of the author.