Trump pledges a 50% tariff on copper imports

0:04Hello, I'm Sam Fenwick. Welcome along to Business Matters on the BBC World Service. coming up on the programme today. High prices and uncertain futures. President Trump has slapped a 50 % tariff on copper, the metal of electrification. That sent prices soaring and left US businesses guessing. Tax breaks for solar and wind are rolled back, so we'll look at what that could mean for US energy prices. And we hear from a Californian bike maker caught up in a trade war. His bikes are at sea and he has no idea what tariffs they'll face when they arrive on US soil. As this tariff situation evolves, we really have no idea what amount of cash we're going to have to come up with to pay off the tariff bill as well as the freight forwarders and get the goods into our warehouse.

0:58Also coming up in this first half hour of the programme, the US Supreme Court has cleared the way for mass federal job cuts. Unions say essential services could be at risk. We'll hear from one of the worker representatives on the front line. Now, as ever on Business Matters, we're joined by two guests. Today, we have Jessica Klein. She's a business consultant. She joins us today from Pyongyang in Malaysia. So very good morning to you, Jessica. How are you? I'm good, Sam. And it's Penang in Malaysia. Penang is in North Korea. Oh, I'm sorry. No worries. Lovely to join you. It's lovely to have you on the programme.

1:38We've got lots to talk about. We'll get into tariff talk in just a minute. But let's also meet Reema Rahman, White House and Legal Affairs Editor at The Hill. It's a political online news website. And you're joining us today from Washington, Reema. That's correct, Sam. Great to have you with us on the programme. Thank you so much for your time. Let's crack on then and talk about tariffs. Not a day goes by when we are not talking about tariffs. On Tuesday, it was copper's turn to be in the spotlight of the US President Donald Trump's tariff war. Speaking at a cabinet meeting on Tuesday, Donald Trump said, today we're doing copper, and then he slapped on a 50 % levy on any imports of the metal.

2:29What happened as a consequence? Well, as you might expect, prices reach record highs. Ronan Murphy is the head of base metals at the price reporting agency Argos Media, which tracks global commodity prices. Copper is used in every kind of major industry. It's used in infrastructure. It's used in wiring across all of these industries. It's an essential metal for anything to do with the energy transition, electric vehicles. So it's essentially a critical mineral that isn't often referred to as a critical mineral. Now, the tariff on copper is higher than what markets expected. What did markets expect?

3:08Why is it higher? And what's it done to prices? Three questions all in one there. Well, I think the markets hoped, well, they say expected. I think they hoped that it would be 25 % because that was the original kind of similar tariff that was originally put on steel and aluminium. However, steel and aluminium were lifted to 50 % just last month in June. So I'm not surprised at all that they've gone for 50 % first up. And that's what it's done to prices. The prices on the COMEX exchange, copper prices on the COMEX exchange in the US have gone up by over 12 % just in the last few hours to around$5.50 per pound.

3:42So it's had a very extreme impact already. Now, over the past sort of 12 months, at least since the beginning of this year, economies, businesses have been stockpiling copper, haven't they? They've been sort of preparing for this and stocks have dropped to their lowest level since 2023. 2023. So prices have been kind of rising, haven't they, since the turn of the year? Yes. Well, global stocks in the London Metal Exchange and Shanghai Exchange networks have fallen. But stocks in the US, which is COMEX, have actually risen significantly. And as you say, the US buyers have really been stockpiling.

4:20We saw over 400 ,000 tons of refined copper imported into the US in April and May combined alone, which is around, you know, that's approaching half of the typical imports they do for a single year. So they do have a big stockpile they can work with in the near term. Now, the US does mine some copper, doesn't it? But it also does rely very heavily on imports from Chile, Canada, and Mexico. So what is that going to do to the copper industry in the United States? Well, the US relies on imports for around about between 45-50 % of its consumption. It does have a lot of projects that are in the pipeline.

4:56They're all at very early stages. They need funding. They need funding, I think, most likely from the government and also from the private sector. And the companies operating those projects will hope that this tariff news gives more impetus to getting those projects off the ground and through permitting. But it does need to be kind of stated that most of those projects, in the best case scenario, you're not going to start producing copper until late 2020s, early 2030s at the earliest. That was Ronan Murphy. He is from Argus Media. Reema, I want to come to you first. What's the White House strategy here?

5:32Because the US does import quite a lot of copper, doesn't it? And as Ronan was saying there, it's going to be a long time until there are more copper mines online in the US. So why slap such high tariffs on such an important commodity? Well, I think the tariff rate on copper, as is the tariff rate that the administration has been setting on countries and various other materials, have to do with what the president believes is reducing and eliminating what he sees as an unfair deficit that the U.S. has with other countries. That's really the baseline foundation of all of this. When it comes to the math, unfortunately, we don't always get the sort of reasoning behind the particular percentages that the administration is setting.

6:24And when we have gotten some math, like when they first implemented or announced the reciprocal tariffs back in April, well, it was very hard to kind of drill down and make sense of just how these rates were set and how they all relate to the deficit. Jessica, what about copper exporting countries in Asia, like Malaysia or nearby Indonesia? How might they be viewing this policy? At the moment, they're not in the beauty parade, Sam. The impact is heaviest Chile, Canada, Peru, Mexico. So I think Asia, no impact. But much more alarmingly, I think yesterday, PwC produced a report that 17 of the copper producing nations would be facing drought by 2035.

7:12And this would impact global semiconductor production by about 32%. And that's the kind of number that hits GDP figures. I think the last time they had this kind of a global chip shortage, US GDP was whittled away by about 1%. So this tariff, I think, is terrifying. Overall, the letters he sent out were pretty grim. And everyone's sort of slightly rabbit in the headlights. Everyone's having to recalibrate, recalculate, something like that. We'll talk a bit more about renewable energy in the second half of the programme related to sort of tax cuts in the United States. But what could this do? What could these tariffs on copper do to the clean energy projects, do you think?

7:58Electric vehicle manufacturing. Well, I think he's already been desperately trying to unpick some sort of friendly Biden policies, right? So the EV car subsidies, either for new or for secondhand, would be dropped. But copper, I think it's just so, what's the word I want, completely centrifugal to, for example, AI owing to high power demand by data centers. And then, you know, kind of the chain continues. continues. So if you kind of stall it with this massive tariff hike, 50 percent, when people were budgeting 25, it could be it could be not good news at all for many, many people in the entire cycle.

8:45Well, on Tuesday, President Trump did not stop at COPPA. Here he is at a cabinet meeting. We'll be announcing something very soon on pharmaceuticals. We're going to give people about a year, a year and a half to come in. And after that, they're going to be tariffed at a very, very high rate, like 200%. We'll give them a certain period of time to get their act together. But they were all here. Now they all left. They went to other places because we allowed... People that sat in this room allowed it to happen. And I don't allow it to happen. The people in this room don't allow it to happen. So we're going to be announcing pharmaceuticals, chips, and various couple of other things, you know, big ones.

9:25So Rima, we were talking about chips though with Jessica, but 200 % potential tariffs on pharmaceuticals. Now he's talked about rolling out tariffs on pharmaceuticals since this whole kind of agenda started back in January. But perhaps the first indication today of when they might actually come in. Yes, that's correct. I also found it telling that in this particular instance, he's giving it a year to a year and a half, which I believe speaks to the complications of our health care industry in this country. is very complicated. It's extremely expensive. And something like a 200 % tariff on pharmaceuticals could greatly disrupt supply chains, which will impact, you know, people having access to their medicine and of course, the cost of the medicine.

10:14So this stands to have a really great impact. And that is, you know, one of the highest percentages that the administration has imposed on tariffs overall so far. Do you think 12 months is long enough for the pharmaceutical industry to sort to get its house in order in the States to be able to manufacture locally for local people? I'm not sure. I suspect that the pharmaceutical companies are trying to figure that out at the moment themselves. Jessica, yesterday on Monday, we were talking about Donald Trump posting these letters on his social media site. Malaysia was one of those that faced a 25 % tariff and a delay of the 1st of August.

10:55It was in this kind of first 14, if you like. What's been going on in Malaysia in reaction to that? What have businesses been saying on Tuesday? It has been quite muted, if I'm not wrong. I think the government itself was very sort of, what's the word I want, sort of compliant. Oh, OK, kind of we'll take it on the chin. But there were some minor voices of dissent you know why why 25 why us what have we done um so there there was there was sort of two types of of polarized reactions was there any largely largely it was gentle was there any sort of answer as to as to why why why else why why why malaysia it's to do with the deficit i think it was uh the deficit angle but i think malaysia at the moment is energizing the whole you know, Western Peninsula for data center demand.

11:53So they're very, very keen on inviting foreign companies in. And they're very keen to stay with semiconductor production or semiconductor production equipment. So they kind of like, if this is what we have to court in fighting this battle, we shall we shall try and, you know, survive and thrive. One of your big exports to the US, but also around the world as semiconductors. Donald Trump was talking as well against tariffs on semiconductors. That's got to be a big concern, hasn't it? Oh, that will be a very deep one. If it strikes directly at semiconductors, that will be a very major, major piece of bad news.

12:40But I think, for example, on this pharmaceutical thing, Sam and Rima, just harking back quickly. I think Rima touched on how complex health insurance was in the US. I think the scary thing is that somewhere like Malaysia, I was just going to say, even fairly expensive prescription items can be bought over the counter at quite controlled prices. So the US population, whatever, you know, 250 million plus, I think in Asian countries, as various diseases progress, if they can keep pharmaceutical supplies cheap, you know, this is going to be where people will win and not where people will lose. If you know what I mean.

13:28Just on trading, just back to trading, the US is Malaysia's second largest trading partner, its largest export destination. Trade in 2024 rose about 30 % to$71 billion. You've got a couple of weeks, three weeks or so, to get this deal over the line before the 1st of August. It really does have to happen, doesn't it, for the country's economy? Absolutely, absolutely. I think there's other problems here onshore, domestic, but it will be very interesting to see how the senior government and all the administration will try to tackle this 25 % figure and if there can be some massaging downwards. I know that at the moment the UK is the only country that seems to have the lightest of touches at 10%.

14:18We will talk tariffs again a little later on in the programme, but let's move on to the US Supreme Court, which has cleared the way for the Trump administration to move ahead with mass federal job cuts, a plan previously blocked by a lower court. Tens of thousands of government workers could now be at risk. Critics say the plans could threaten essential government services. Rima, I know that you've been covering this as the White House and legal affairs editor for The Hill. This also has been going on since January, January when President Trump returned to the White House. Just give us a bit of a in a nutshell what's happened over the last six months.

14:58Oh, sure. So the ruling that the Supreme Court made today is just actually one very small nugget of legal challenges to a wide variety of Trump executive orders since he returned to office in January. And this particular case has to do with about a dozen federal agencies, as you said, impacts tens of thousands of employees, some of whom have already been let go. So this this ruling could impact, you know, whether or not certain people can come back to their jobs, which has happened in other legal challenges related to mass layoffs. This is not the only one. It is just one small slice that the administration went to the Supreme Court to to try to get a ruling to to be in their favor, which is essentially what happened today.

15:54Now, the interesting part about this ruling, and this is something that is typical that the Supreme Court tends to do, is they're not necessarily ruling directly on the executive order. They have left the door open for plaintiffs to challenge a specific agency's plan for mass layoffs down the road. So this is a sort of typical way these Supreme Court decisions have come down. Birthright citizenship kind of landed this way as well, where, yes, it does side with the administration, but it doesn't necessarily completely close the door to a legal challenge. It just might not be as vast as this particular one.

16:35OK, well, let's talk to Michael Braddon now. He is the president of the AFGE Local 928. He represents over 1 ,000 workers at the Department of Energy. They build and maintain power lines in the Pacific Northwest. Welcome to the program, Michael. Thanks for being with us. What's your reaction, first of all, to this latest Supreme Court decision?

17:03Disbelief. I mean, this is something that many of us are going, how could this happen? You know, the biggest thing, and I believe Justice Jackson said it in her dissent, that Congress is the one that approves budgets and how many people – and obviously the salaries and everything for the departments and the various agencies. And if there's going to be a cut, there's a plan drawn up. It's proposed to Congress, and then Congress goes through it, and then the Office of Budget goes through it. And then the plan goes to OPM and then it can be done. And that didn't happen. You know, Trump just said, cut him.

17:45And that was it. And that's kind of the way he is. He doesn't plan much of anything at all. He just does. And that ends up making him look like a, you know, a grass, piece of grass in the field that just moves the direction of the wind, it seems. And it makes it very difficult for people just to plan their lives. You know, the first time around, we had people who had just moved here from out of state because they'd just gotten a job with us. And then they were probationary, so they lost their job. And so they had moved out, but then they were brought back. And they said, look, I got another job back out of state.

18:19I moved away. I can't take my job back. I'm starting a new job. So you found people who you're working with have lost their jobs already? Oh, yeah. Yeah. What sort of figures are you talking about? You know, as a kind of rough percentage, What sort of what's the sort of percentage loss up to now? Well, we lost most of ours to the delayed resignation slash retirement program thing. But there's also been some drops have been because of the loosening of the controls, if you will. So the gates are kind of were kind of opened and people were let go. So there were some other executive orders based off of, well, if you're if you have a security clearance, then you must take care of national security.

19:05which is not true. I was in the Army for a while, had autopsy of clearance, and obviously I knew something about national security then. But in my agency, there isn't anybody that does anything on national security, but we have people that are being considered that, and so now they're not part of the union, not allowed to be in a union because they do national security stuff. And that's, again, not true. So they don't have any protections. And because they lost protections, some of those people are being let go for just minor things. They're like, oh, hey, we noticed you didn't come in here. at 8.15, like you said, you came in here at 8.17.

19:38So, you know, you cheated on your time. And it's really ridiculous. But that's what's happening to some folks. So the mood among members right now is probably pretty low by the sounds of it. Morale sounds like it would be quite low. It is really low. And people are getting numb now. When it first started happening, I was getting calls regularly from people who were just so distraught that I would just listen to them, you know, get extremely emotional about their job and what's happening, and they didn't know what to do. And I was just there listening just because I had no one else to talk to. And I would comfort them as best I could.

20:23But I would say, well, we're trying to do what we can, but we can only do so much. And AFT is still fighting, and we still intend to fight. But it's just unbelievable this is still going on this long. That's hard for you, isn't it? I mean, the Trump administration will say that this is about efficiency, reducing the size of government. Does that help you or how do you respond to that? No, it doesn't. This is not going to save enough money that's going to make a difference. It's I heard a billionaire say the other day that, you know, he he sold the company the day for one hundred and eighty million dollars and he made eighteen million dollars.

21:02And he said if the government would have come in and said ten million of that is taxes, he says that the difference between eight million making eight million dollars and eighteen million dollars gives me no difference in happiness. So having me as a billionaire pay more taxes doesn't change my happiness any. But going to someone who makes$40 ,000 and telling them you have to pay$2 ,000 more in taxes, that does change their happiness because they are living paycheck to paycheck. And that's the problem in the U.S. is we're letting these corporations and these people who make so much money keep more and more of their money.

21:39That's where the taxes are going. I just want to ask you one more question. We're coming to the end of this half of the program. What will you do now? Will you appeal this decision? Oh, most certainly. I mean, AFGE will. I'm not AFGE national, but that's the intention. Yeah, we keep going on these court cases and we appeal them and we keep trying to win. We're going to keep pushing until we do. Well, thank you very much, Michael Braddon there, president of the AFGE Local 928, representing workers from the Department of Energy. Thank you, Michael, for joining us on the programme today. You are listening to Business Matters on the BBC World Service with me, Sam Fenwick.

22:27We've got Jessica Kine with us today. She's a business consultant based in Malaysia. and Reema Rahman, White House and Legal Affairs Editor at The Hill, talking to us today from Washington. Coming up in the second half, we will be talking more about the tariffs and how they might be affecting businesses. And we'll also be looking at the renewables industry in the United States and what impact Donald Trump's policies are having on that.

23:03You're listening to Business Matters on the BBC World Service with me, Sam Fenwick. We've got Jessica Kine with us today. She is a business consultant. She's joining us this morning from Malaysia. And we've got Rima Rahman, White House and Legal Affairs Editor at The Hill. And she's talking to us from Washington. We're going to turn back to the subject of tariffs. And we're talking big. We were talking about the big picture earlier, what it means for countries, for whole industries relying on metals like copper. But what if you're trying to run a business importing your goods from abroad? One American company caught in the middle of Trump's tariff wars is Marin Bikes.

23:44Based in California, they design their mountain bikes at home in the US, but they build them in Indonesia and Vietnam before shipping them back to the US. So with parts and frames coming in from Asia, CEO Matt van Vont told me that they have no idea month to month what their bikes will end up costing. So at any point in time, we've got four or five, six containers of bicycles. It's about 240 bikes per container that are in transit, either through our factory in Vietnam or Indonesia. And, you know, the biggest problem now is lack of clarity. As this tariff situation evolves, we really have no idea what amount of cash we're going to have to come up with to pay off the tariff bill as well as the freight forwarders and get the goods into our warehouse and then make a calculation as to how that affects our market pricing.

24:39Did you know or were you able to factor in the tariffs before those bikes were manufactured? charts. So initially, we absorbed some of the cost. And then eventually, as our cost of goods crept up and our margins decreased, we had to pass it along. And at that point, I think it was about a six and a half to 7 % increase. And, you know, as the goods now look to be burdened a little further, we'll have to reassess what our market price is and our dealer price and most likely see further increases. It's hard to say exactly how much, but it's going to hurt. And at least what I can say is this hits everybody.

25:19There really isn't any competitor in this country that is assembling domestically of any significance that would have an advantage in the marketplace. Well, that brought me on to my next question, because one of the arguments President Trump uses is that stuff like bikes could be assembled in the United States. Why can't they? Well, so there's two answers to that. One is that there is some domestic bike assembly. The only one I know of any note of any volume is actually shutting down because the tariffs also apply to the components. And as they're importing frames and or components for assembly, it's pushed their costing to the point where they don't believe they can be successful.

26:03The components are really the other point. So there is a supply chain for bicycle components that are at consumer price points. You can find components like hubs and bearing sets and handlebars and things domestically, but they're generally only a very premium level of product. So for affordable components, China, Taiwan, Vietnam, Cambodia, Philippines for tires, things like that, it's a very well-established supply chain to avoid the import duties and build the bike domestically. You'd have to replicate that supply chain in the United States, or there would have to be exemptions for assemblers that want to import the components to assemble the bikes domestically, which doesn't exist at this time.

26:53You know, the amount of investment capital that we'd need to set up an assembly facility for ourselves, it would be difficult to justify. We're a medium-sized bike brand. We don't have enough volume that we could build a, you know, scalable assembly facility. And then secondly, to go back and try to find partners that would be willing to open the tooling to make all the various components in this country. it would take years, years, if they were even willing to undertake it. So that was Matt van Enkvoort. He is the CEO of Marin Bikes. They're based in California. They assemble their bikes in Vietnam and Indonesia, and they ship them back to the U.S.

27:37market. Jessica, as a business consultant, what is your advice right now for businesses like Matt's? Kind of trying to navigate these tariffs. These tariffs. It's a million dollar question, I suppose, isn't it? Well, the only slight comforting factor I would say is that even with the 14 scarlet letters going out, for somewhere like Malaysia, the original tariff threat was 24. And now the amended one for the August 1st deadline is 25%. So in that sense, it's not, you know, it's not kind of quick like seismic shattering jump. And then the other thing to remember, importantly, as always with these things, is he sent his deputy dog, Rubio lands today.

28:25And I think from tomorrow in KL, there will be big meetings with ASEAN leaders. So Trump has fired his 14 scarlet letters salvo. But then Rubio is here to perhaps soothe some kind of nerves and overall flutter. and something may be worked out. So for every manufacturer, everyone who's angsting over supply chain management, pricing, how do I cope? Is my business scalable that I can set up a facility on US soil? Everything is wait and see, I'm afraid, Sam. I mean, we were hearing about 90 deals in 90 days. And now we've had the 14 letters that have been sent out. You're suggesting there, I think, that there will probably be some deals, but we've only got till the 1st of August to make those deals.