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The copper market is no stranger to wild gyrations in prices. Uncertainty over just how much copper China has stockpiled, strikes or floods at mines in South America, and market speculation have for years all contributed to a business environment where prices can turn on a dime. It all dramatically impacts the value of wire and cable inventory held by electrical manufacturers, distributors and reps. It even forced one highly respected metals economist with S&P Global, John Mothersole, to call copper “the bane of his existence” because of the difficulty forecasting the future direction of copper prices, which on the morning of Feb. 27 hit $2.57 per lb on the COMEX.
Buckle up for more volatility. On Feb. 25, President Trump issued an executive order entitled “Addressing the Threat to National Security From Imports of Copper,” which could be an opening salvo to introduce copper tariffs. The executive order read in part: “The United States has ample copper reserves, yet our smelting and refining capacity lags significantly behind global competitors. A single foreign producer dominates global copper smelting and refining, controlling over 50% of global smelting capacity and holding four of the top five largest refining facilities. This dominance, coupled with global overcapacity and a single producer’s control of world supply chains, poses a direct threat to United States national security and economic stability.
“It’s the policy of the United States to ensure a reliable, secure and resilient domestic copper supply chain. The United States’ increasing dependence on foreign sources of copper, particularly from a concentrated number of supplier nations, along with the risk of foreign market manipulation, necessitate action under section 232 of the Trade Expansion Act to determine whether imports of copper, scrap copper and copper’s derivative products threaten to impair national security.
“Within 270 days of the date of this order, the Secretary of Commerce (Howard Lutnick) shall submit a report to the President that includes findings on whether United States dependence on copper imports threatens national security; recommendations on actions to mitigate such threats, including potential tariffs, export controls, or incentives to increase domestic production; and policy recommendations for strengthening the United States copper supply chain through strategic investments, permitting reforms and enhanced recycling initiatives.”
While the White House has not offered any specifics on a copper tariff percentage, a Feb. 25 Reuters article that John Gross, publisher of The Copper Journal, sent to his subscribers said Trump directed Howard Lutnick “to start a new security probe under Section 232 of the Trade Expansion Act of 1962, the same law that Trump used in his first term to impose 25% global tariffs on steel and aluminum.”
The uncertainty over Trump’s tariffs on many products, — but particularly core metals like steel, aluminum and copper — is the topic of the day in the electrical wholesaling industry. Roger Little, CEO of Rexel USA, said in an upcoming Electrical Wholesaling podcast that at the recent NAED Eastern Conference in Tampa, FL, tariffs were the number one topic in the conversations he had with vendors. “There wasn't a vendor partner that wasn't talking about tariffs,” he said.
David Gordon, president of Channel Marketing Group, said in his Electrical Trends blog post reporting on that conference, “Everyone was asking how manufacturers are handling the tariffs. Some distributors shared that most manufacturers are processing it as a price increase. Some are in the midst of doing an increase due to importing from China, others are waiting to see what happens with Mexico and Canada tariff proposals.
“A few distributors said some manufacturers are going forward with surcharges. Reportedly, one national distributor distributed a letter to manufacturers saying it will be rejecting all surcharges.”