Copper import tariffs are transforming the US recycling industry

President Donald Trump and Commerce Secretary Howard Lutnick have indicated a 50 percent tariff on imported copper will start Aug. 1, though neither the White House nor the Commerce Department has released additional information as of press time. Instead, in a televised portion of an early July cabinet meeting, Trump said, “Today we’re doing copper,” turning to Lutnick for confirmation that the tariff rate will be 50 percent.

The administration launched a Section 232 investigation into copper this February, examining U.S. imports of raw mined copper, copper concentrates, copper alloy, scrap copper and derivative products and whether they threaten U.S. national security and economic stability, with potential trade remedies to be suggested.

Ed Meir of Marex, which is headquartered in London, tells Recycling Today that adding a tariff on copper imports is puzzling given the U.S.’ dependence on them.

“Last year, America imported roughly 810,000 tons of cathode, roughly half of what it consumes,” he says. “A third of these imports came from Chile, a quarter from Canada and the balance mostly from Mexico and Peru.”

"We’ve been dealing with volatility in copper for the last several years, but this is historic and unheard of.” – Joel Fogel of Cohen Recycling

In response to the tariff announcement, the spot price of COMEX copper rose by 66 cents, or 13 percent, reaching what copper industry analyst John E. Gross, publisher of “The Copper Journal,” calls “a record high close of $5.65” per pound.

When the investigation was announced in February, COMEX copper rose 20 cents per pound.

“Whenever Trump opens his mouth, it moves the commodity markets,” says Joel Fogel, executive vice president of Cohen Recycling, Middletown, Ohio. “What it has done with COMEX is absurd.”

Fogel says 90 percent of COMEX activity is by nonphysical users who are acting based on speculation.

If the tariff is enacted, he says, it could curb cathode entering the U.S. that is replacing scrap in melt shops. “Why buy bare bright when you can buy cathode so cheap?”

However, spreads have been widening, Fogel says, because the COMEX price is “based on an inflated market that just doesn’t make sense because it doesn’t match the physical market.”

In the aluminum sector, spreads also have widened as the Midwest Premium grows.

Fogel describes domestic demand for recovered aluminum as being OK, adding that it’s difficult to sell on a spot basis. “That can’t be said on the copper side,” where export demand remains strong, too.

“We’ve been dealing with volatility in copper for the last several years, but this is historic and unheard of,” Fogel says, referring to the COMEX run-up as being “knee-jerk reactions to what is going on politically, socially and economically. So much is driving markets outside of our control.”

Without details on the promised tariff, Gross says the global copper market “will remain dangerously volatile.”