How Copper Tariffs Affect Everything You Touch

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0:43With LPL Financial, we provide the services to help push you forward. When it comes to your finances, your business, your future, the only question should be, what if you could? Pit advertisement. Anna Kendrick is not a client of LPL Financial LLC and receives compensation to promote LPL. Investing involves risk including potential loss of principal LPL Financial LLC member FINRA SIPC. This episode sponsored by Homebase. Homebase is built for small businesses trying to do it all. The neighborhood coffee shop, the local gym, the family-run restaurant. With Homebase, you can schedule your team, track time, run payroll, and manage hiring from one easy app.

1:15so you can spend less time chasing timesheets and more time running the business your customers love. More than 150 ,000 small businesses already use Homebase to keep their teams on track. Start free at joinhomebase.com. Homebase, built for small businesses that do it all. Bloomberg Audio Studios. Podcasts, radio, news. The United States' trading partners are trying to navigate a global trade landscape that's being radically reconfigured by the Trump administration. Over the weekend, President Trump announced a 30 % across-the-board tariff on imports from Mexico and a 30 % tariff on imports from the European Union.

1:58It comes on the heels of another major trade announcement. Last week, President Trump held a cabinet meeting at the White House. Now, this is something his predecessors did behind closed doors. But Trump beckoned in reporters with their cameras and their microphones. Leave the cameras there. It's fine. Trump is a fairly accessible individual. Joe Doe reports on mining and metals at Bloomberg, where his beat is economic statecraft. I've covered steelworkers for almost the entirety of my career. And he will, like, go to a mill and just, like, chat with the guys who work the shop floor. And then he'll also, like, talk to the billionaire CEO.

2:36And it's, like, an incredible talent. So he invited the press into this cabinet meeting and somehow the question of copper tariffs came up. And we haven't heard about copper tariffs for a long time. He hasn't said anything about them in a while. And so this time he just said, yeah, we're doing copper tariffs. I believe the tariff on copper, we're going to make it 50 percent. 50 percent. And the market went wild. U.S. copper futures surged to a record after President Trump says he'll put a 50 percent tariff on the metal. There's now a sort of scramble to get metal from the rest of the world to U.S.

3:13destinations before the tariffs kick in. Copper prices rose in New York by 17 percent at one point. I mean, I've covered copper for a decade. I've never seen a 17 percent move in copper prices. Joe says he looked up copper prices on the Bloomberg terminal, hoping to find out the last time prices rose by this much. It gave me an answer, which was in a gray color, which means it only knows, going back to data from 1988, that it's never been that much of a move. The reason for that move is copper is everywhere. And a change in how it's priced could upend everything, from the production of cars and electronics to the construction of homes and offices and military installations.

3:59I'm David Gurra, and this is The Big Take from Bloomberg News. Today on the show, the anatomy of a tariff. What President Trump's decision to target a key commodity reveals about his evolving approach to trade and how a renewed push to return to America's industrial past could dampen its economic future. To understand why this new copper tariff has rocked markets, take a second to think about how much of what you use every day includes it. It's all over your house because every electrical outlet is connected to wiring and all wiring is copper wiring in your house. Bloomberg's Joe Doe says it's in electronics, wires, cars.

4:42It's in every skyscraper, these microphones. It's in every computer, automobile, iPhone. These are the first processors using copper technology that will ever be shipping in a product. That's Steve Jobs in 1999 announcing a new line of Apple computers. So we are extremely happy. These things are speed demons. Copper is in the rivets on Levi's jeans. Those fashionable copper rivets. There was a time many decades ago when much of that copper came from the U.S. of A. Chevrolet boasted about that in this film the car company produced in the 1950s. Copper from Utah and Montana, from Michigan and Wyoming.

5:24Copper is one of those industries where the United States was a dominant producer of what it domestically consumed. But as the world became increasingly electrified, demand for copper shot up and U.S. producers couldn't keep up with that demand. So they turned to other countries to help fill the gap. Today, more than 40 percent of the copper the United States uses is imported. Chile is like the copper producing country in the world. And with all mineral resources, there's just like luck. Like the United States sits on a lot of oil. That's lucky. Chile sits on a lot of copper, and for them, that's lucky.

6:09The grades are depleting, but it had been very high grade where you can just scrape it off the top of the earth and easily pull off the rock part and get the copper and send that off as a product. So the United States, one, you have your own depleting copper ore bodies. There is a surge of demand, right, as globalization really takes hold. you realize there's far more that you need to make than was previously expected. And so if you can't do it, you look elsewhere and you say, well, great, there's this fairly great trading partner in Chile. They do some good stuff. Canada are wonderful, too. Mexico, other parts of the world.

6:48You say, OK, well, they'll fill in what we can't produce. And so you realize at some point that you can't be the sole distributor of that. And that's OK. But it's not OK with President Trump. Joe says it's hard to know why the president has decided to focus on copper now, but this is part of what's motivating him. The president of the United States has made clear for both of his terms that he wants on-shoring of manufacturing in the United States of America. Bring it back. Bring it back. Come back to America. And Make America Great Again really is about a period of United States history of manufacturing that's really like 1950 to 1979.

7:27Buffalo is a great example. The peak population of a city like Buffalo was in the 1950s. So the president hears, hey, this was a industry that we were once dominant in. And he probably thinks, well, why can't we be that again? So Trump announced this 50 percent tariff on copper imports, writing on Truth Social, quote, this 50 percent tariff will reverse the Biden administration's thoughtless behavior and stupidity. America will once again build a dominant copper industry. The thing is, boosting U.S. copper production is unlikely to be easy. I can tell you it takes 10 to 20 years to get a mine from, okay, here's the deposit, to we're now rolling off commercial-scale copper to the biggest wire companies in the United States.

8:16Take a mine out in Arizona called Resolution Copper as an example. It assumed control of the historic magma mine in 2004 and began the permitting process about 10 years later. It has faced so many hurdles. It's a copper owned by Rio Tinto and part owned by BHP. Big conglomerate. The two biggest miners on planet Earth. So this is a very serious deposit. If that mine were to start tomorrow, and it won't, it would be able to push out the equivalent of one quarter of U.S. demand of copper just from that mine. So it's a big deal. And it is still trying to get to production. Here's the CEO of Rio Tinto on Bloomberg Television last year.

8:58You're still dealing with just the permitting of this project. When could we actually see it working? Yeah, it's a long process. So we are talking towards the end of the decade that we can have production. And that's the problem with mines. The President of the United States says do this now. That would be great. But you have permitting processes. And even if the president of the United States were to just completely obliterate the permitting processes, you also have communities. Resolution has had so much trouble getting up off the ground because it is built next to an indigenous sacred site.

9:32And that's just one example of the fights you will face. It doesn't matter if you're on a red state or a blue state. You do not like mines or big manufacturing facilities in your backyard. NIMBY. Not in my backyard. Not in my backyard. And like, this is not just like an American thing. This is people. NIMBY, in particular to industrial activity, is everywhere. And there is no expert in this space that I have spoken to who thinks these tariffs will go into place and suddenly you're going to see copper mine projects coming up on the list. You're probably just going to have a situation where Freeport-McMoran and Rio Tinto continue to produce in the United States at the same pace that they have, maybe a little bit more.

10:19And you're going to remain dependent on half of your copper coming from outside the country, and that copper will be more pricey. And then we deal with the fallout. Fallout that has already started. There are three different categories of copper. Raw copper, refined copper, and semi-finished copper products. Things like wires, metal sheets, tubes, and plates. And the president's announcement immediately raised questions about what would be tariffed. Are you getting a tariff on raw copper? Are you getting it on semi-fabricated products like wire and tube and copper faucets? Nerd out if you need to.

10:56Totally, right? And then, like, what about scrap? Because, you know, the least cost ton to make new copper is scrap copper. It's a great thing about metal. Once you're done with it, you pull it out, you can remelt it down to molten liquid, and then you can recast it with other copper, and it's new copper. Joe says the president has answered some of those questions. He's reported those 50 % tariffs will include both refined and semi-finished copper. Refined copper is widely used in electrical grids, construction, car manufacturing, and consumer electronics, while semi-finished copper is important to the military-industrial supply chain.

11:38After the break, Joe explains how copper suppliers are rushing to beat the president's August 1st deadline, plus what this tariff tells us about how the administration plans to approach tariffs on other sectors.

11:54Some people treat ChachiPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChachiPT.com by selecting Work Mode.

12:34Available on Plus and Pro plans. What if you could make that stop? With LPL Financial, we remove the things holding you back and provide the services to help push you forward. If you're a financial advisor, what if you could have more freedom, but also more support? Ready to invest? What if you could have an advisor that really understood you? When it comes to your finances, your business, your future, At LPL Financial, we believe the only question should be, what if you could? Pit advertisement, Anna Kendrick, is not a client of LPL Financial LLC and receives compensation to promote LPL. Investing involves risk, including potential loss of principal LPL Financial LLC member FINRA SIPC.

13:09This episode sponsored by Homebase. Homebase is built for small businesses trying to do it all. The neighborhood coffee shop, the local gym, the family-run restaurant. With Homebase, you can schedule your team, track time, run payroll, and manage hiring from one easy app. so you can spend less time chasing timesheets and more time running the business your customers love. More than 150 ,000 small businesses already use Homebase to keep their teams on track. Start free at joinhomebase.com. Homebase, built for small businesses that do it all.

13:47In the past week, as news about President Trump's copper tariff has thrown producers and traders for a loop, We've seen some winners emerge, commodity traders, miners, and banks that have managed to ship copper to the U.S. ahead of August 1st when the tariff is scheduled to be put in place. The value of the metal has skyrocketed. Some traders have described getting more than$1 ,000 on every ton of copper, which is more than 10 times what it usually goes for. I talked to one of my shipping sources and they said, you heard about Hawaii, right? You heard about Puerto Rico, right? And I was like, well, what do you mean?

14:24He goes, people are already shipping metal on the water on boats to those locales because they can't get to the mainland in time or they're concerned they won't get to the mainland in time. And I said, well, like, is that a problem? And the best answer he gave me was, well, think about it. Not every harbor or not every dock is prepared to handle copper. And why is that important? Because copper is one of the most valuable products that thieves like to take out of warehouses. Is that right? Yeah. Like you hear every I feel like every few years there's a story that comes out that's like the copper from X was stripped out of this thing.

15:07And, you know, it was a big heist and somebody made a lot of money off of it. Copper per pound is at about five dollars and fifty cents. And, you know, if you can strip it out or if you can steal it in cathode form, you're going to make a pretty penny. And so he said, listen, the guys in Hawaii don't handle copper imports. So one of the struggles that shippers and brokers are going to have to do is call up the dock and say, you have to handle this with care and there has to be security around this copper because it's going to be sitting in your port for X period of time. That copper is already piling up in port cities like New Orleans, which is getting increasingly close to capacity.

15:53The sudden push to get copper to the U.S. as quickly as possible has also left places like China with dangerously low inventory. It's just the latest example of how the U.S. president's actions have caused turmoil in the global economy. And in that same cabinet meeting last week, President Trump previewed another tariff announcement in a way that seemed off the cuff. And 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 if they have to bring the pharmaceuticals into the country, the drugs and other things into the country.

16:28They're going to be tariffed at a very, very high rate, like 200 percent. I asked Joe what we know about how those tariffs on pharmaceuticals could play out and how they're part of a broader strategy when it comes to sectoral tariffs, levies that aren't specific to countries, but to whole sectors. I was talking to a trade lawyer some weeks ago who said, look at pharmaceuticals and copper and rare earths. And these are all the Section 232s, among many others right now, lumber, that are being researched by the Commerce Department. And these are tariffs that the president could put in place on national security grounds.

17:02Correct. That's exactly right. The law passed during the Kennedy administration back in 1962. This trade lawyer said, we call these the problem child trade issues. There's a reason Trump didn't touch all of these with section 232 during his first term. He only did steel and aluminum. And that's because steel and aluminum are actually pretty easy to fit into that law, which is there's a national security importance to those two different products. Got to build ships. Yeah. Yeah. That's pretty straightforward. Like steel is steel and aluminum is aluminum. And like it's easy to implement. But pharmaceuticals and lumber and copper are far more complex.

17:42And I think the struggle right now inside the Commerce Department is they're trying to get it right. They're trying to figure out how they get around these nuances. And I think the career officials are saying it's just not one number. It's just not one policy that will solve this issue. Is there a commensurate amount of fear in that industry to what we're seeing in the metals industry as well about what that would mean if you saw 200 % tariffs on pharmaceutical ingredients? Right. Yeah. One of these trade sources told me is like, do you think Pfizer really wants to worry about producing generic drugs?

18:20Like, no, they don't. It's low margin. They'll lose money making these things. And like there's a reason. This is like so many other things. Why did X industry go abroad to India or to China or wherever it might be? Well, because smart people in the United States said, this is not worth it for us to do this thing anymore. There's no profit there. Or if there is a profit, it's such a slight margin that we feel like we're wasting our time and our shareholders' time. Could you talk about the broad strategy here? There's been so much focus in recent weeks on these country-by-country trade policies.

18:54We've seen the letters. We've heard the president's threats. And now we have these sectoral tariffs. How does that fit into the president's broader trade strategy? Is it being forced in effect by this court decision that we saw a few weeks ago that by using the Section 232, this national security law, they're in effect easier for him to put in place and have confidence that they'll stay in place? That's absolutely correct. I spoke to Wilbur Ross, the former Commerce Secretary under Trump's first administration some months ago, right when the president took office. And I asked him, like, is Trump going to go ahead with tariffs?

19:27And Wilbur Ross said the president knows he can use Section 232 tariffs and Section 301 tariffs. And the courts won't stop him because the courts already heard the cases in Trump 1.0 and said, yes, 301 and 232 are written into U.S. law and allows the president of the United States to utilize these on grounds of national security. Joe says it's hard to say how it's going to play out and if these tariffs will actually have staying power. Once the tariff is implemented, how does it actually affect purchasing? How does it actually affect potential inflation? How does the president and his team react to that?

20:10And where do they feel generous in giving some sort of break or the opposite? This is The Big Take from Bloomberg News. I'm David Gurra. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. If you like this episode, make sure to follow and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow.

20:48What if you could have more wins? more support, more sound effects. At LPL Financial, we like the sound of that because LPL offers more. Advisors, what if you could have more ways to help your clients? Ready to invest? What if you could find an advisor that really understands you? When it comes to your finances, your business, your future, at LPL, we ask, what if you could? Paid advertisement. Investing involves risk, including potential loss of principal. LPL Financial LLC, member FINRA SIPC. This episode sponsored by Homebase. Homebase is built for small businesses trying to do it all. The neighborhood coffee shop, the local gym, the family-run restaurant.

21:28With Homebase, you can schedule your team, track time, run payroll, and manage hiring from one easy app. So you can spend less time chasing timesheets and more time running the business your customers love. More than 150 ,000 small businesses already use Homebase to keep their teams on track. Start free at joinhomebase.com. Homebase, built for small businesses that do it all. Didn't catch the latest Roland Martin Unfiltered podcast? Here's what you missed. People wake up and go, oh, damn, wait a minute, hold up. They changed all of that? Yes. It's real. This is a wholesale attack. It is targeting black people in every federal agency.

22:07It's raw. White folks have never allowed that reckoning to last more than a decade. Catch Roland Martin's daily commentary on the Black Information Network. And download Roland Martin Unfiltered on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.