Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: The United States's trading partners are trying to navigate a
Speaker 2: global trade landscape that's being radically reconfigured by the Trump administration.
Speaker 2: Over the weekend, President Trump announced a thirty percent across
Speaker 2: the board tariff on imports from Mexico and a thirty
Speaker 2: percent tariff on imports from the European Union. It comes
Speaker 2: on the heels of another major trade announcement. Last week.
Speaker 2: President Trump held a cabinet meeting at the White House.
Speaker 2: Now this is something his predecessors did behind closed doors,
Speaker 2: but Trump beckoned in reporters with their cameras and their microphones.
Speaker 1: You could leave the cameras there. It's fun.
Speaker 3: Trump is a fairly accessible individual.
Speaker 2: Jode reports on mining and metals at Bloomberg, where his
Speaker 2: beat is economic state craft.
Speaker 3: I've covered steel workers for almost the entirety of my career,
Speaker 3: and he will go to a mill and just like
Speaker 3: chat with the guys who worked the shop floor, and
Speaker 3: then he'll also like talk to the billionaire CEO. And
Speaker 3: it's like an incredible talent. So he invited the press
Speaker 3: into this cabinet meeting, and somehow the question of copper
Speaker 3: tearfs came up, and we haven't heard about copper tairas
Speaker 3: for a long time. He hasn't said anything about him
Speaker 3: in a while, and so this time he just said, yeah,
Speaker 3: we're doing copper tears.
Speaker 1: I believe the tariff on copper. We're going to make
Speaker 1: it fifty percent.
Speaker 4: And the market went wild.
Speaker 2: US copper features search to a record of the President.
Speaker 2: Trump says he'll put a fifty percent tariff on the metal.
Speaker 2: There's nervous sort of scramble to get metal from the
Speaker 2: rest of the world to US destinations.
Speaker 4: Before the tariffs kick.
Speaker 3: In, Copper prices rose in New York by seventeen percent
Speaker 3: at one point. I mean, I've covered copper for a decade.
Speaker 3: I've never seen a seventeen percent move in copper prices.
Speaker 2: Joe says he looked up copper prices on the Bloomberg terminal,
Speaker 2: hoping to find out the last time prices rose by
Speaker 2: this much.
Speaker 3: It gave me an answer, which was in a gray color,
Speaker 3: which means it only knows, going back to data from
Speaker 3: nineteen eighty eight, that it's never been that much of
Speaker 3: a move.
Speaker 2: The reason for that move is copper is everywhere, and
Speaker 2: to change in how it's priced could upend everything from
Speaker 2: the production of cars and electronics to the construction of
Speaker 2: homes and offices and military installations. I'm David Gura, and
Speaker 2: this is the big take from Bloomberg News today on
Speaker 2: the show The Anatomy of a Tariff. What President Trump's
Speaker 2: decision to target a key commodity reveals about his evolving
Speaker 2: approach to trade and how a renewed push to return
Speaker 2: to America's industrial past could dampen its economic future. To
Speaker 2: understand why this new copper tariff has rocked markets, take
Speaker 2: a second to think about how much of what you
Speaker 2: use every day includes it.
Speaker 3: It's all over your house because every electrical outlet is
Speaker 3: connected to wiring, and all wiring is copper wiring in
Speaker 3: your house.
Speaker 2: Bloomberg's Jode says, it's in electronics, wires, cars.
Speaker 3: It's in every skyscraper, these microphones, it's in every computer, automobile, iPhone.
Speaker 2: These are the first processors using copper technology that will
Speaker 2: ever be shipping in a product. That's Steve Jobs in
Speaker 2: nineteen ninety nine announcing a new line of Apple computers.
Speaker 4: So we are extremely happy. These things are speed demons.
Speaker 2: Copper is in the rivets on Levi's jans.
Speaker 3: Those fashionable copper rhythms.
Speaker 2: There was a time many decades ago when much of
Speaker 2: that copper came from the US of a Chevrolet boasted
Speaker 2: about that in this film. The car company produced in
Speaker 2: the nineteen fifties.
Speaker 3: Copper from Utah and Montana, from Michigan and Wyoming. Copper
Speaker 3: is one of those industries where the United States was
Speaker 3: a dominant producer of what it mestically consumed.
Speaker 2: But as the world became increasingly electrified, demand for copper
Speaker 2: shot up, and US producers couldn't keep up with that demand,
Speaker 2: so they turned to other countries to help fill the gap. Today,
Speaker 2: more than forty percent of the copper the United States
Speaker 2: uses is imported.
Speaker 3: Chile is like the copper producing country in the world,
Speaker 3: and with all mineral resources, there's just like luck. Like
Speaker 3: the United States sits on a lot of oil, that's lucky,
Speaker 3: Chile sits on a lot of copper, and for them,
Speaker 3: that's lucky. The grades are depleting, but it had been
Speaker 3: very high grade where you can just scrape it off
Speaker 3: the top of the earth and easily pull off the
Speaker 3: rock part and get the copper and send them off
Speaker 3: as a product. So the United States one, you have
Speaker 3: your own depleting copper ore bodies. There's surge of demand
Speaker 3: right as globalization really takes hold. You realize this far
Speaker 3: more that you need to make than was previously expected.
Speaker 3: And so if you can't do it, you look elsewhere
Speaker 3: and you say, well, great, there's this fairly great trading
Speaker 3: partner in Chile. They do some good stuff. Canada are
Speaker 3: wonderful too, Mexico, other parts of the world. You say, okay,
Speaker 3: well they'll fill in what we can't produce. And so
Speaker 3: you realize at some point that you can't be the
Speaker 3: sole distributor of that, and that's.
Speaker 2: Okay, but it's not okay with President Trump. Joe says,
Speaker 2: it's hard to know why the President has decided to
Speaker 2: focus on copper now, but this is part of what's
Speaker 2: motivating him.
Speaker 3: The President of United States has made clear for both
Speaker 3: of his terms that he wants on shoring of manufacturing
Speaker 3: in the United States of America. Bring it back, bring
Speaker 3: it back, come back to America, and make America great again.
Speaker 3: Really is about a period of United States history of
Speaker 3: manufacturing that's like really like nineteen fifty to like nineteen
Speaker 3: seventy nine.
Speaker 4: Right, like Buffalo is a great example.
Speaker 3: The peak population of a city like Buffalo was in
Speaker 3: the nineteen fifty es. So the President heres, hey, this
Speaker 3: was a industry that we were once dominant in, and
Speaker 3: he probably thinks, well, why can't we be that again?
Speaker 2: So Trump announced this fifty percent tariff on copper imports,
Speaker 2: writing on truth social quote, this fifty percent tariff will
Speaker 2: reverse the Biden administration's thoughtless behavior and stupidity. America will
Speaker 2: once again build a dominant copper industry. The thing is
Speaker 2: boosting US copper production is unlikely to be easy.
Speaker 3: I can tell you it takes ten to twenty years
Speaker 3: to get a mine from Okay, here's the deposit to
Speaker 3: We're now rolling off commercial scale copper to the biggest
Speaker 3: wire companies in the United States.
Speaker 2: Take a mine out in Arizona called Resolution Copper as
Speaker 2: an example. It assumed control of the historic Magma mine
Speaker 2: in two thousand and four and began the permitting process
Speaker 2: about ten years later.
Speaker 3: It has faced so many hurdles. It's a copper owned
Speaker 3: by Rio Tinto and part owned by BHP, big conglomerate,
Speaker 3: the two biggest miners on planet Earth. So this is
Speaker 3: a very serious deposit. If that mine were to start tomorrow,
Speaker 3: it won't it would be able to push out the
Speaker 3: equivalent of one quarter of US demand of copper just
Speaker 3: from that mine. So it's a big deal and it
Speaker 3: is still trying to get to production.
Speaker 2: Here's the CEO of Rio Tinto on Bloomberg Television last year.
Speaker 4: You're still dealing with just the permitting of this project.
Speaker 2: When could we actually see it working.
Speaker 4: Yeah, it's a long process.
Speaker 2: So we are talking towards the end of the decade
Speaker 2: that we can have production.
Speaker 3: And that's the problem with mines. President United States says
Speaker 3: do this now. That'd be great, but you have permitting processes.
Speaker 3: And even if the President United States were to just
Speaker 3: completely obliterate the permitting processes, you also have communities. Resolution
Speaker 3: has had so much trouble getting up off the ground
Speaker 3: because it is built next to an indigenous sacred site.
Speaker 3: And that's just one example of the fights you will face.
Speaker 3: It doesn't matter if you're on a red state or
Speaker 3: a blue state. You do not like mines or big
Speaker 3: manufacturing facilities in your backyard.
Speaker 2: Nimby, not in my backyard.
Speaker 3: Not my backyard. And like this is not just like
Speaker 3: an American thing. This is people nimby in particular to
Speaker 3: industrial activity is everywhere, and there is no expert in
Speaker 3: this space that I have spoken to who thinks these
Speaker 3: tears will go into place. And suddenly you're going to
Speaker 3: see copper mind projects coming up on the list. You're
Speaker 3: probably just gonna have a situation where Freeport mcmaran and
Speaker 3: Rio Tinto continue to produce in the United States at
Speaker 3: the same pace that they have, maybe a little bit more,
Speaker 3: and you're going to remain dependent on half of your
Speaker 3: copper coming from outside the country, and that copper will
Speaker 3: be more pricey. And then we deal with the fallout.
Speaker 2: Fallout that has already started. There are three different categories
Speaker 2: of copper rack copper, refined copper, and semi finished copper
Speaker 2: products things like wires, metal sheets, tubes, and plates. And
Speaker 2: the president's announcement immediately raised questions about what would be tariffed.
Speaker 3: Are you getting a tariff on raw copper? Are you
Speaker 3: getting it on semi fabricated products like wire and tube
Speaker 3: and copper faucets.
Speaker 4: Out totally right?
Speaker 3: And then like what about scrap, because you know, the
Speaker 3: least cost ton to make new copper is scrap copper.
Speaker 3: It's a great thing about metal, like you just once
Speaker 3: you're done with it, you pull it out, you can
Speaker 3: remelt it down to molten liquid, and then you can
Speaker 3: recast it with other copper and it's new copper.
Speaker 2: Joe says, the President has answered some of those questions.
Speaker 2: He's reported those fifty percent tariffs will include both refined
Speaker 2: and semi finished copper. Refined copper is widely used in
Speaker 2: electrical grids, construction, car manufacturing, and consumer electronics, while sem
Speaker 2: i finished copper is important to the military industrial supply chain.
Speaker 2: After the break, Joe explains how copper suppliers are rushing
Speaker 2: to beat the president's August first deadline, plus what this
Speaker 2: tariff tells us about how the administration plans to approach
Speaker 2: tariffs on other sectors. In the past week, as news
Speaker 2: about President Trump's copper tariff has thrown producers and traders
Speaker 2: for a loop, we've seen some winners emerge commodity traders, miners,
Speaker 2: and banks that have managed to ship copper to the
Speaker 2: US ahead of August first, when the tariff is scheduled
Speaker 2: to be put in place. The value of the metal
Speaker 2: has skyrocketed. Some traders have described getting more than one
Speaker 2: thousand dollars on every ton of copper, which is more
Speaker 2: than ten times what it usually goes for.
Speaker 3: I talked to one of my shipping sources and they said,
Speaker 3: you heard about right, You heard about Puerto Rico, right,
Speaker 3: And I was like, well, what do you mean. He
Speaker 3: goes people are already shipping metal on the water on
Speaker 3: boats to those locales because they can't get to the
Speaker 3: mainland in time, or they're concerned they won't get to
Speaker 3: the mainland in time. And I said, well, like, is
Speaker 3: that a problem? And the best answer he gave me was, well,
Speaker 3: think about it. Not every harbor or not every dock
Speaker 3: is prepared to handle copper. And why is that important?
Speaker 3: Because copper is one of the most valuable products that
Speaker 3: thieves like to take out of warehouse.
Speaker 2: Is that right?
Speaker 3: Yeah, like you hear every I feel like every few
Speaker 3: years there's a story that comes out that's like the
Speaker 3: copper from X was stripped out of this thing, and
Speaker 3: you know it was a big heist and somebody made
Speaker 3: a lot of money off of it. Copper per pound
Speaker 3: is at about five dollars and fifty cents, and you know,
Speaker 3: if you can strip it out or if you can
Speaker 3: steal it in cathode form.
Speaker 4: You're gonna make a pretty penny.
Speaker 3: And so he said, listen, the guys in Hawaii don't
Speaker 3: handle copper imports. So one of the struggles that shippers
Speaker 3: and brokers are going to have to do is call
Speaker 3: up the dock and say, you have to handle this
Speaker 3: with care, and there has to be security around this
Speaker 3: copper because it's going to be sitting in your port
Speaker 3: for X period of time.
Speaker 2: That copper is already piling up in port cities like
Speaker 2: New Orleans, which is getting increasingly close to capacity. The
Speaker 2: sudden push to get copper to the US as quickly
Speaker 2: as possible has also left places like China with dangerously
Speaker 2: low inventory. It's just the latest example of how the
Speaker 2: US president's actions have caused turmoil in the global economy.
Speaker 2: And in that same cabinet meeting last week, President Trump
Speaker 2: previewed another tarif announcement in a way that seemed off
Speaker 2: the cuff.
Speaker 1: And we'll be announcing something very soon on pharmaceuticals. We're
Speaker 1: going to give people about a year a year and
Speaker 1: a half to come in, and after that they're going
Speaker 1: to be tariffed if they have to bring the pharmaceuticals
Speaker 1: into the country, to drugs and other things into the country,
Speaker 1: they're going to be tarriffed at a very very high rate,
Speaker 1: like two hundred percent.
Speaker 2: I asked Joe what we know about how those tariffs
Speaker 2: and pharmaceuticals could play out and how they're part of
Speaker 2: a broader strategy when it comes to sectoral tariffs, levies
Speaker 2: that aren't specific to countries but to whole sectors.
Speaker 3: I was talking to a trade lawyer some weeks ago
Speaker 3: who said, look at pharmaceuticals.
Speaker 4: And copper and rare earths.
Speaker 3: And these are all the Section two thirty two's, among
Speaker 3: many others right now lumber that are being researched by
Speaker 3: the Commerce Department.
Speaker 2: And these are tariffs that the president could put in
Speaker 2: place on national security grounds.
Speaker 4: Correct, that's exactly right.
Speaker 3: The law passed during the Kennedy administration back in nineteen
Speaker 3: sixty two. This trade lawyer said, we call these the
Speaker 3: problem child trade issues. There's a reason Trump didn't touch
Speaker 3: all of these with Section two thirty two during his
Speaker 3: first term. He only did steal an aluminum, and that's
Speaker 3: because steel and aluminum are actually pretty easy to fit
Speaker 3: into that law, which is there's a national security importance
Speaker 3: to those two different products.
Speaker 2: Got to build ships, go, yeah, yeah.
Speaker 3: It's pretty straightforward, like steal is steel and aluminum is aluminum,
Speaker 3: and like it's easy to implement, But pharmaceuticals and lumber
Speaker 3: and copper are far more complex. And I think the
Speaker 3: struggle right now inside the Commerce Department is they're trying
Speaker 3: to get it right. They're trying to figure out how
Speaker 3: they get around these nuances, and I think the career
Speaker 3: officials are saying, it's just not one number, it's just
Speaker 3: not one policy that will solve this issue.
Speaker 2: Is there a commensurate amount of fear in that industry
Speaker 2: to what we're seeing in the metals industry as well?
Speaker 2: About what that would mean if you saw two hund
Speaker 2: percent tariffs on pharmaceutical ingredients, right.
Speaker 4: Yeah.
Speaker 3: One of these trade sources told me is, like, do
Speaker 3: you think Pfizer really wants to worry about producing generic drugs? Like, no,
Speaker 3: they don't. It's low margin. They'll lose money making these things.
Speaker 3: And like there's a reason this is like so many
Speaker 3: other things. Why did X industry go abroad, you know,
Speaker 3: to India or to China or wherever.
Speaker 4: It might be.
Speaker 3: Well, because smart people in the United States said, this
Speaker 3: is not worth it for us to do this thing anymore.
Speaker 3: There's no profit there, or if there is a profit,
Speaker 3: it's such a slight margin that we feel like we're
Speaker 3: wasting our time, in our shareholder's time.
Speaker 2: Could you talk about the broad strategy here. There's been
Speaker 2: so much focus in recent weeks on these country by
Speaker 2: country trade policies. We've seen the letters, we've heard the
Speaker 2: president's threats, and now we have these sectoral tariffs. How
Speaker 2: does that fit into the president's broader trade strategy? Is
Speaker 2: it being forced in effect by this court decision that
Speaker 2: we saw a few weeks ago that by using the
Speaker 2: Section two thirty two, this National security law, they're an
Speaker 2: effect easier for him to put in place and have
Speaker 2: confidence that they'll stay in place.
Speaker 4: That's absolutely correct.
Speaker 3: I spoke to Wilbur Ross, the former Commerce secretary under
Speaker 3: Trump's first administration, some months ago, right when the president
Speaker 3: took office, and I asked him, like, is Trump going
Speaker 3: to go ahead with tariffs? And what Barros said, The
Speaker 3: President knows he can use Section two thirty two tariffs
Speaker 3: in Section three oh one tariffs, and the courts won't
Speaker 3: stop him because the courts already heard the cases in
Speaker 3: Trump one point zero and said yes, three oh one
Speaker 3: and two thirty two are written into US law and
Speaker 3: allows the President of United States to utilize these on
Speaker 3: grounds of national security.
Speaker 2: Joe says, it's hard to say how it's going to
Speaker 2: play out and if these tariffs will actually have staying power.
Speaker 3: Once the tariff is implemented, and how does it actually
Speaker 3: affect purchasing, How does it actually affect potential inflation, How
Speaker 3: does the President and his team react to that, and
Speaker 3: where do they feel generous in giving some sort of
Speaker 3: break or or the opposite.
Speaker 2: This is the Big Take from Bloomberg News. I'm David Gura.
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Speaker 2: Thanks for listening.
Speaker 4: We'll be back tomorrow.