This week, Donald Trump activated one of the most important tariffs in his new era. Copper fees, although they are not often identified as such, include warnings of market analysts from the moment the Republican agreed to the White House. The reason is that although this is not like that first of allReddish metal – one of the pillars of world industry And as such, the inflationary effect of the measure can be the largest of all.
The main reason is its influence on Construction and industry Passing, especially through all electrical systems. According to the Center for Strategic Research, the increase in copper prices has a decisive influence on the IPC, although on a different character than oil. Its influence is less explosive in the short term, but more sticking to medium and long.
The institution indicates that each 10% increase in copper prices generates Equivalent of 0.2% in the CPC for 12 monthsHowever, this blow does not dissolve, but causes An increase of 0.3% in the base and 0.5% in the general three years later From the increase in prices. The reason is that while black gold is used at that time as fuel, copper is used as an indirect entrance in electric equipment and equipment. Something, which looks especially good in construction. “The indirect effects of base metals are four times greater than the direct effect.”
It should be noted that With an increase of 13.2% in one day with an announcement And 39% is that we were, the coup can be really intense. Already with the threat of tariffs in the previous months and a really narrow offer, prices rose. Nevertheless, the company’s offer for August in August about a 50% tax made everything jump through the air. The main reason is to force the United States to produce copper with its own means and can use this instant victim to become self -sufficient for a completely key metal in the future.
In addition, the United States is strongly exposed outside to accept such an aggressive measure at the tariff level. The country imports 40% of the contribution, which is strategic. Chile is responsible for 35% of imports From the USA and Canada represent 26%. The decision, which is also made in a market context, which has already been extremely adjusted with a deficit of 200,000 tons in the world market.
The market is almost to the limit
The reason is that production is very difficult to expand, while the general march of the economy and the expansion of copper -intensity industries is accelerated (electric cars, semiconductors, etc.). According to the International Copper Research (ICSG), production production in 2026 will increase by only 2.3% by 2025 and 2.5%. This is for now Demand increases by 2% this year And even more next. These recent data were an important update in which they dealt an important blow to the economy for the tariff policy of Donald Trump.
Nevertheless, this assessment, which indicates a narrow market “saved” by the brake in the economy, is only one of the most optimistic. In the case of an international energy agency, it is told about Stable deficit that will expand to 30% By 2035.
Copper receives a very powerful demand to implement its use. While all types of industry use it, The car manufacturer finds them necessary, But also electric, wind, chemical and military. There are so many applications that many times their price is usually a link to measure the health of the world economy.
The blow, in any case, will come to arrive. From the Bank of America, they explain that the US market is preparing for this. In your booking 5% of world production accumulates, With 600,000 tons of stocks. “We believe that reserves will be the first signal for consumers when reserves are falling. We see that less metal will be sent to the United States. ”
Useless effort?
Eva Mantie, ING analyst, says that, worst of all, that all these inflation efforts can be in a bucket for the United States, the key is in numbers. The United States produces only 5% of the global copper with Falling production by 20% in ten yearsFor many years, the American miners abandoned copper in favor of more profitable projects both in case and abroad, forcing countries such as Chile, to become absolute leaders and main suppliers.
The problem for the Dutch bank is that “the construction of new mines is not fast, It takes about 29 years From -for long processes of obtaining permits. “The expert gives as an example tariffs for steel and aluminum of their first stage, which strove for the same purpose, increase national production. However, 8 years after the first sets in these products, ”the US steel industry produces 1% less than in 2017, and aluminum is 10% less. “
In this sense, in Ven, a double blow favorable to the United States and is very negative for its interior. In the case of a North American country, “it is possible that deliveries are simply reducedThe field as soon as the reserves are exhausted This will bring greater inflation, which will increase the production costs of all American industry only when Trump tries to reduce interest rates. “
In Europe (and all over the world), the result will be the opposite. Manufacturers will focus on their orders in these markets, creating a rewall. Therefore, from ING, “We believe that it will be a bassist For prices in London (reference package of raw materials for all of Europe). It is likely that an improvement in the availability of copper outside the United States is created, which will weigh prices. “
Not everyone agrees that this is a useless effort. The founder of Ivanhoe Mines, Robert Friedland, commented on in an interview with Financial Times that this is an intellectual measure to “arouse the population” in the need to become self -sufficient with raw materials. “There is a series of critical raw materials And without this, nothing can be done in relation to global warming or ecology of the world economy, and there is a critical vulnerability in national security. “
