Rolls of copper wires stored at the Nexans manufacturing facility in Lens, northern France, on May 11, 2022. Denis Charlet/AFP via Getty Images
U.S. President Donald Trump said July 8 that he plans to put a 50 percent tariff on copper imports into the United States. With the U.S. market accounting for over half of Canada’s copper exports, the tariffs could have a significant impact on the Canadian copper industry.
Trump’s announcement is “very concerning” for Quebec’s copper industry, ” said Pierre Gratton, CEO of the Mining Association of Canada, in an email to The Epoch Times.
According to the latest statistics available from the federal government, 52 percent of Canada’s copper exports in 2023 went to the United States, followed by 17 percent to China and 12 percent to Japan.
In that year, Canada exported $9.4 billion in copper, representing around 1 percent of its $965.1 billion exports of goods and services. By comparison, in the same year Canada exported over $20 billion of iron and steel, both of which have now come under U.S. tariffs. Canada’s total mineral and metals exports comprised 6 percent of the nation’s GDP in 2023.
As technology and artificial intelligence become increasingly important for the United States to compete with adversaries such as China, commodities like copper, which are used as conductors, have gained greater strategic significance. Although the United States is a major producer of copper, it uses about twice as much of the metal as it produces and needs to import the commodity.
The world’s largest copper producers are Chile, the Democratic Republic of Congo, Peru, and China.
Canada is currently subject to a 25 percent tariff on all products that don’t fall under the United States-Mexico-Canada Trade agreement. It has also been hit with blanket 50 percent tariffs on steel and aluminum. The premiers of Ontario and Quebec, Canada’s major metal producers, say the tariffs are having a major negative impact on their economies, leading to job losses.
“The U.S. was a destination market for 6.5 million tonnes of Canadian steel,“ Canadian Steel Producers Association CEO Catherine Cobden said on June 26. ”Consequently, we have significantly dropped shipments and have experienced close to one thousand job losses to date and are preparing for thousands more.”
Although global demand for copper is projected to exceed supply in the future, the current reality is different, said Jack Lifton, co-chair of Canada’s Critical Minerals Institute. Canadian producers will find it difficult to find viable new markets at the moment, he said.
“Copper smelters are actually shutting down around the world because there’s no business, and so Canada will not be able to switch,” Lifton told The Epoch Times.
“The future is yet to come. Copper miners need to sell their products, not to inventory them, if they want to keep the banks from repossessing.”
US-Canada Negotiations Ongoing
The threat of copper tariffs comes amid ongoing trade negotiations between Canada and the United States, with Prime Minister Mark Carney warning in May that more “unjustified” tariffs could be coming.
In his remarks, Carney said that Canada’s “top priority” is to make a new deal with the United States as well as to “strengthen our collaboration with reliable trading partners and allies around the world.”
On the same day Trump announced the potential copper tariffs, he also said tariffs on pharmaceuticals could reach up to 200 percent.
Ottawa has said it is on course to reach a new deal with Washington by July 21, although U.S. envoy to Canada Peter Hoekstra said last week he couldn’t confirm the deadline. He added that Canada is likely going to have to pay “some level of tariff” regardless.
The mining association’s Gratton says it remains to be seen whether copper will be part of the negotiations with the United States.
“We need to find out what this means, whether our trade talks include copper, and how it will be applied,” he said.
Canada cancelled its digital services tax on June 29, two days after Trump said he would end trade negotiations due to the levy, which applied to U.S.-based tech companies such as Amazon, Google, and Netflix.
The White House was scheduled to announce new international trade deals by July 9 but it extended the deadline Aug. 1.
From Proposal to Policy
Trump has used the threat of tariffs as a bargaining tool with the stated aim of ensuring the United States is treated fairly in having access to foreign markets, and for incentivizing companies to engage in “onshoring” and moving operations to the United States.
Although Trump did follow through with global tariffs on aluminum and steel as well as tariffs on Canada and Mexico related to the flow of fentanyl and illegal immigrants over the U.S. borders, he recently walked back 145 percent tariffs on China to 30 percent after negotiating a deal and China removing restrictions to exports of rare earth elements.
Whether or not the new copper tariff is applied remains to be seen. Lifton said that in addition to hurting Canada’s copper industry, a tariff could leave the United States without enough copper to fulfill domestic demand, as the United States currently consumes more copper than it produces.
“[The tariff] doesn’t take into account the enormous amount of time to bring projects to production. And then it’s not about just producing copper,” Lifton said. “We have to have the capacity in the United States to change that copper ore to wire, and this is a multiple step supply chain, and I don’t know that we have that existing capacity.”
Lifton said the United States has two large copper projects under development in Arizona and Alaska, but that getting copper ore to the stage of producing wire and usable copper for industry will take two to five years.
“I have to assume that the purpose of this tariff is somehow to negotiate a price,” Lifton said.
In February, Trump ordered a Section 232 review of copper imports, allowing him to put tariffs in place if they’re determined to be necessary to protect national security. Copper is key in the production of electronics, computer chips, industrial machinery, and cars, as well as military technology and telecommunications.
U.S. Commerce Secretary Howard Lutnick has said the purpose of the proposed copper tariffs is to increase domestic production.
“With pharmaceuticals and semiconductors, those studies are being completed at the end of the month, and so the president will then set his policies then, and I’m going to let him wait to decide how he’s going to do it,” Lutnick told CNBC.
The White House has said that part of the reason for the steel and aluminum tariffs is to boost the domestic economy and be able to meet demand for defence and critical infrastructure in a national emergency.
“A report from the first Trump Administration found that steel import levels and global excess were weakening our domestic economy and threatening to impair national security” the White House said on June 3.
Andrew Moran contributed to this report.