Copper Prices Surge as Trump Threatens Import Tariffs

Analysts skeptical that US mining capacity can quickly meet demand

Following President Donald Trump’s threat to impose tariffs on copper imports, U.S. copper prices are rising sharply, but industry experts doubt that domestic mining can quickly scale up to meet the country’s needs.

Trump’s Tariff Plan

President Trump announced plans on Tuesday to impose 50% tariffs on copper imports, citing a Section 232 investigation under the U.S. Trade Expansion Act. This investigation suggests that relying on copper imports poses a threat to national security.

The tariff’s timing and scope—whether it will affect all countries or only some—remain unclear.

Eugene Lei, CFO of Hudbay Minerals Inc., said that the motivation behind these tariffs mirrors that of existing tariffs on steel and aluminum: to stimulate domestic production and encourage investment within the United States.

“All of these tariff policies are essentially to repatriate industrial production in the United States,” he stated.

Challenges to Domestic Production

Expanding U.S. copper production will be challenging and time-consuming, according to experts.

Christopher LaFemina, an analyst at Jefferies, noted that while higher copper prices may incentivize investment in mines and smelters, mine development takes considerable time. He suggested that achieving full self-sufficiency in copper within a decade is unlikely.

The Florence project in Arizona, operated by Taseko Mines Ltd., is slated to commence production later this year.

Hudbay’s Copper World project in Arizona, despite its economic potential, is not expected to begin production until 2029, according to Mr. Lei.

“You can have all the incentives in the world… The fact is it still takes two to three years to build one of these things,” Lei explained.

For copper projects still in early stages, timelines of up to 15 years to reach production are common in the U.S. According to the U.S. Geological Survey, the average lead time for developing a new mine is between 7 and 10 years (USGS).

US Copper Market

While the U.S. is a major copper miner, producing 1.1 million tonnes last year, it still imports almost half of its needs. Chile, the world’s top producer, mined over five million tonnes during the same period.

The U.S. refining sector is smaller, producing 890,000 tonnes in 2024, dwarfed by China’s 12 million tonnes.

Environmental concerns and slow permitting processes make the construction of new smelting capacity in North America improbable.

Jeffrey Franzen, a retired mining consultant, highlighted that the last copper smelter built globally was by Freeport-McMoRan in Indonesia, costing US$4-billion at the request of the Indonesian government.

“Freeport didn’t want to build it due to so much existing capacity in China and Japan,” said Franzen. “Given the worldwide smelting and refining capacity, and the capital cost, there seems to be little economic incentive to build new capacity in the U.S. And nobody wants a smelter in their backyard.”

Impact on Prices and Beneficiaries

The prospect of copper tariffs has already led to significant price premiums for U.S. copper (COMEX) compared to the London Metal Exchange (LME) contract.

COMEX prices surged 11% following Trump’s tariff announcement, briefly hitting a record high of US$5.90 a pound, with a premium of around 30% compared to LME.

Companies with existing U.S. operations, such as Freeport, stand to gain the most from potential copper tariffs. LaFemina predicts that a 50% copper tariff would generate an additional US$2.8-billion in annual free cash flow for Freeport.

Other potential beneficiaries include Asarco and Rio Tinto PLC.

Sam Crittenden, an analyst at RBC Dominion Securities Inc., suggests that Arizona Sonoran Copper Company Inc. could also benefit if the tariffs are long-lasting.