Why Trump's copper tariff could raise cost of appliances, cars, electricity

President Trump's move to impose a 50% tariff on U.S. copper imports targets a vital metal that is widely used in many products and industries. That could lead to higher prices for everything from appliances and electronics to cars and home repairs, economists and industry experts said.

Mr. Trump announced the copper duties late Wednesday on his Truth Social platform, saying they will take effect Aug 1.

"Copper is necessary for Semiconductors, Aircraft, Ships, Ammunition, Data Centers, Lithium-ion Batteries, Radar Systems, Missile Defense Systems, and even, Hypersonic Weapons, of which we are building many," he wrote. "Copper is the second most used material by the Department of Defense! Why did our foolish (and SLEEPY!) 'Leaders' decimate this important Industry? This 50% TARIFF will reverse the Biden Administration's thoughtless behavior, and stupidity. America will, once again, build a DOMINANT Copper Industry."

Ryan Young, a senior economist at the Competitive Enterprise Institute, a nonpartisan think tank, said copper is an integral component in electrical wiring and plumbing, as well being used as a heat conductor in radiators and household appliances. He worries that a hefty copper tariff will trigger inflation.

Copper prices had already surged 13% on Tuesday, reaching a record high, after Mr. Trump floated the possible tariff.

"It's bad news all around," Young said of Mr. Trump's proposed copper tariff. "If companies' costs go up they pass them along to consumers, so we'd see higher prices for home repairs and anything that uses copper."

Copper tariffs could also make maintaining the nation's electric grid more expensive and drive up household energy costs, Young said. "It would negatively affect the electricity industry and anybody who uses electricity."

Mr. Trump has said that tariffs provide financial incentives to ramp up domestic production, including of critical materials like copper, and help create manufacturing jobs.

"America cannot be reliant on foreign imports of the copper that's necessary for key military hardware, infrastructure and everyday electronics," White House Spokesman Kush Desai said in a statement to CBS MoneyWatch. "The Trump administration is committed to reshoring manufacturing that's critical [to] our national and economic security with a two-pronged approach of tariffs and a full suite of supply-side reforms like deregulation and the pro-growth tax cuts of The One, Big, Beautiful Bill."

The biggest users of copper — and therefore most exposed to the tariff increase — include a vast range of industries, covering everything from construction to semiconductors, electric vehicles and renewable energy components such as solar panels, according to industry data.

Daan de Jonge, copper demand and prices lead analyst at Benchmark Mineral Intelligence, said in a research note that "a 50% price hike will have inevitable ripple effects on the cost of new infrastructure, the cost of housing the cost of fridges, cars, air conditioning."

For consumers, that means the cost of appliances such as refrigerators and air conditioners, as well as EVs, would likely rise if this 50% tariff goes into effect, according to analysts.

"Copper is an important element in development of semiconductors and electric vehicles. And the tariff announcement caused prices to go up quite dramatically, so you can tell it's a pretty big deal," Veronique de Rugy, a professor of political economy and senior research fellow at George Mason University's Mercatus Center, told CBS MoneyWatch. "The reason President Trump picked copper is because it's such a big deal for a lot of important things."

The U.S. relies heavily on copper imports from Chile, followed by Canada. The U.S.'s net copper imports met 53% of U.S. demand for copper last year, according to Morgan Stanley research.

Experts note that Mr. Trump isn't certain to hike duties on copper, saying his proposal could be aimed more at securing concession from exporters.

"These are two examples of countries that the U.S. could offer some sort of quota or export restraint relief to as part of a broader deal," UBS chief investment strategist Kurt Reiman told CBS MoneyWatch, referring to Canada and Chile. A revamped U.S. trade policy could also include carveouts for foreign copper suppliers, he added

Although the U.S. could ramp up domestic copper production, it would take years to significantly increase output, Reiman said. "We aren't ready. The mines would have to be built out, and that's typically a multi-year process."

The sectoral tariff threats come after Mr. Trump this week announced stiff new tariff rates on 20 nations that have not yet reached trade agreements with the U.S and that he said would take effect on Aug. 1. He outlined the new rates, posted in nearly identical letters on Truth Social, as a 90-day pause on so-called "reciprocal" levies was set to expire on Wednesday.

AFP contributed to this report.

• Tariffs
• Trump Administration