Tariffs on copper and aluminium by Trump could increase costs for U.S. customers
Analysts and industry participants stated on Tuesday that President Donald Trump's promise to impose tariffs on U.S. imports of copper and aluminum would lead to higher prices for local consumers due a lack of production at home and the time required to renew the industry.
Trump told Republican lawmakers that he will impose tariffs on steel and aluminium, metals needed for the production of U.S. Military hardware.
He said, "We must bring the production back home."
Trump was elected president of the United States in November, promising to reduce costs for the consumers who were still suffering from the inflation spike that occurred during the first half Biden's presidency. Analysts argue that his promise to lower prices may be undermined by his plan to increase tariffs on imported goods in order for the country's manufacturing industry.
The extent of the tariffs was unclear, but a number of mining CEOs had previously stated that they were preparing for various scenarios in anticipation of a possible change in trade flows.
There are a few unknowns. Who will pay for these tariffs, at what level? In the end, they are paid for by consumers in particular when there is no substitute domestically," said Daniel Morgan of Sydney investment bank Barrenjoey.
He said that U.S. aluminum and copper smelters had been closing. To restart them, they would require new infrastructure, power contracts, and other measures. All of these take time.
He added that aluminium producers in Canada, such as Rio Tinto or Alcoa, would not be likely to suffer revenue losses. Instead, the costs will be passed on to automakers, who then pass them onto U.S. customers. Rio Tinto declined comment.
A spokesperson for Alcoa cited comments made by CEO William Oplinger during a call to discuss results last week, which indicated the possibility of "wide-ranging effects on demand, supply and trade flows". A 25% tariff on Canadian exports to the U.S. would cost U.S. clients between $1.5 and $2 billion per year.
A top executive from India's mining lobby group said that the U.S. was the largest export market for India's aluminium and they expected the Indian government to take action to convince Trump not to impose any levies.
B.K. Bhatia is the additional secretary general of the Federation of Indian Mineral Industries.
John Fennell of the International Copper Association Australia, the CEO of the association, said that any tariffs on copper imports into the U.S. could impact the industry, as the country is net importer of copper. However, it might speed up the development of mines like Rio Tinto Resolution in Arizona.
He said that the tariffs would hurt local manufacturers who pay them in the meantime.
Freeport-McMoRan's CEO Kathleen Quirk stated last week that they would not be affected due to any copper tariffs, as all of their U.S. metal is sold domestically and their Indonesian material goes to Asia. She was concerned about the potential impact of copper tariffs on inflation.
Tomomichi Akuta is a senior economist with Mitsubishi UFJ Research and Consulting. He noted that the steel and aluminum tariffs imposed by Trump during his previous term in office had a minimal impact on Japan, which is the third largest steel producer in terms of production.
"The majority (of Japan's exports of steel) are specialty products with added value." Since value-added goods were excluded last time, we anticipate a similar strategy this time. Akuta explained that these value-added goods are hard to replace, so they're less likely to be targeted. Reporting by Melanie Burton, Yuka Arora and Ernest Scheyder from Houston to New Delhi; editing by Christian Schmollinger.
(source: Reuters)
