WEBVTT - How Copper Tariffs Affect Everything You Touch

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>The United States's trading partners are trying to navigate a

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<v Speaker 2>global trade landscape that's being radically reconfigured by the Trump administration.

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<v Speaker 2>Over the weekend, President Trump announced a thirty percent across

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<v Speaker 2>the board tariff on imports from Mexico and a thirty

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<v Speaker 2>percent tariff on imports from the European Union. It comes

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<v Speaker 2>on the heels of another major trade announcement. Last week.

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<v Speaker 2>President Trump held a cabinet meeting at the White House.

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<v Speaker 2>Now this is something his predecessors did behind closed doors,

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<v Speaker 2>but Trump beckoned in reporters with their cameras and their microphones.

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<v Speaker 1>You could leave the cameras there. It's fun.

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<v Speaker 3>Trump is a fairly accessible individual.

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<v Speaker 2>Jode reports on mining and metals at Bloomberg, where his

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<v Speaker 2>beat is economic state craft.

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<v Speaker 3>I've covered steel workers for almost the entirety of my career,

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<v Speaker 3>and he will go to a mill and just like

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<v Speaker 3>chat with the guys who worked the shop floor, and

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<v Speaker 3>then he'll also like talk to the billionaire CEO. And

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<v Speaker 3>it's like an incredible talent. So he invited the press

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<v Speaker 3>into this cabinet meeting, and somehow the question of copper

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<v Speaker 3>tearfs came up, and we haven't heard about copper tairas

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<v Speaker 3>for a long time. He hasn't said anything about him

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<v Speaker 3>in a while, and so this time he just said, yeah,

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<v Speaker 3>we're doing copper tears.

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<v Speaker 1>I believe the tariff on copper. We're going to make

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<v Speaker 1>it fifty percent.

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<v Speaker 4>And the market went wild.

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<v Speaker 2>US copper features search to a record of the President.

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<v Speaker 2>Trump says he'll put a fifty percent tariff on the metal.

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<v Speaker 2>There's nervous sort of scramble to get metal from the

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<v Speaker 2>rest of the world to US destinations.

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<v Speaker 4>Before the tariffs kick.

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<v Speaker 3>In, Copper prices rose in New York by seventeen percent

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<v Speaker 3>at one point. I mean, I've covered copper for a decade.

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<v Speaker 3>I've never seen a seventeen percent move in copper prices.

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<v Speaker 2>Joe says he looked up copper prices on the Bloomberg terminal,

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<v Speaker 2>hoping to find out the last time prices rose by

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<v Speaker 2>this much.

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<v Speaker 3>It gave me an answer, which was in a gray color,

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<v Speaker 3>which means it only knows, going back to data from

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<v Speaker 3>nineteen eighty eight, that it's never been that much of

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<v Speaker 3>a move.

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<v Speaker 2>The reason for that move is copper is everywhere, and

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<v Speaker 2>to change in how it's priced could upend everything from

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<v Speaker 2>the production of cars and electronics to the construction of

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<v Speaker 2>homes and offices and military installations. I'm David Gura, and

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<v Speaker 2>this is the big take from Bloomberg News today on

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<v Speaker 2>the show The Anatomy of a Tariff. What President Trump's

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<v Speaker 2>decision to target a key commodity reveals about his evolving

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<v Speaker 2>approach to trade and how a renewed push to return

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<v Speaker 2>to America's industrial past could dampen its economic future. To

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<v Speaker 2>understand why this new copper tariff has rocked markets, take

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<v Speaker 2>a second to think about how much of what you

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<v Speaker 2>use every day includes it.

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<v Speaker 3>It's all over your house because every electrical outlet is

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<v Speaker 3>connected to wiring, and all wiring is copper wiring in

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<v Speaker 3>your house.

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<v Speaker 2>Bloomberg's Jode says, it's in electronics, wires, cars.

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<v Speaker 3>It's in every skyscraper, these microphones, it's in every computer, automobile, iPhone.

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<v Speaker 2>These are the first processors using copper technology that will

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<v Speaker 2>ever be shipping in a product. That's Steve Jobs in

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<v Speaker 2>nineteen ninety nine announcing a new line of Apple computers.

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<v Speaker 4>So we are extremely happy. These things are speed demons.

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<v Speaker 2>Copper is in the rivets on Levi's jans.

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<v Speaker 3>Those fashionable copper rhythms.

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<v Speaker 2>There was a time many decades ago when much of

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<v Speaker 2>that copper came from the US of a Chevrolet boasted

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<v Speaker 2>about that in this film. The car company produced in

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<v Speaker 2>the nineteen fifties.

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<v Speaker 3>Copper from Utah and Montana, from Michigan and Wyoming. Copper

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<v Speaker 3>is one of those industries where the United States was

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<v Speaker 3>a dominant producer of what it mestically consumed.

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<v Speaker 2>But as the world became increasingly electrified, demand for copper

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<v Speaker 2>shot up, and US producers couldn't keep up with that demand,

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<v Speaker 2>so they turned to other countries to help fill the gap. Today,

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<v Speaker 2>more than forty percent of the copper the United States

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<v Speaker 2>uses is imported.

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<v Speaker 3>Chile is like the copper producing country in the world,

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<v Speaker 3>and with all mineral resources, there's just like luck. Like

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<v Speaker 3>the United States sits on a lot of oil, that's lucky,

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<v Speaker 3>Chile sits on a lot of copper, and for them,

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<v Speaker 3>that's lucky. The grades are depleting, but it had been

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<v Speaker 3>very high grade where you can just scrape it off

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<v Speaker 3>the top of the earth and easily pull off the

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<v Speaker 3>rock part and get the copper and send them off

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<v Speaker 3>as a product. So the United States one, you have

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<v Speaker 3>your own depleting copper ore bodies. There's surge of demand

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<v Speaker 3>right as globalization really takes hold. You realize this far

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<v Speaker 3>more that you need to make than was previously expected.

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<v Speaker 3>And so if you can't do it, you look elsewhere

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<v Speaker 3>and you say, well, great, there's this fairly great trading

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<v Speaker 3>partner in Chile. They do some good stuff. Canada are

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<v Speaker 3>wonderful too, Mexico, other parts of the world. You say, okay,

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<v Speaker 3>well they'll fill in what we can't produce. And so

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<v Speaker 3>you realize at some point that you can't be the

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<v Speaker 3>sole distributor of that, and that's.

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<v Speaker 2>Okay, but it's not okay with President Trump. Joe says,

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<v Speaker 2>it's hard to know why the President has decided to

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<v Speaker 2>focus on copper now, but this is part of what's

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<v Speaker 2>motivating him.

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<v Speaker 3>The President of United States has made clear for both

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<v Speaker 3>of his terms that he wants on shoring of manufacturing

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<v Speaker 3>in the United States of America. Bring it back, bring

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<v Speaker 3>it back, come back to America, and make America great again.

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<v Speaker 3>Really is about a period of United States history of

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<v Speaker 3>manufacturing that's like really like nineteen fifty to like nineteen

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<v Speaker 3>seventy nine.

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<v Speaker 4>Right, like Buffalo is a great example.

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<v Speaker 3>The peak population of a city like Buffalo was in

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<v Speaker 3>the nineteen fifty es. So the President heres, hey, this

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<v Speaker 3>was a industry that we were once dominant in, and

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<v Speaker 3>he probably thinks, well, why can't we be that again?

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<v Speaker 2>So Trump announced this fifty percent tariff on copper imports,

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<v Speaker 2>writing on truth social quote, this fifty percent tariff will

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<v Speaker 2>reverse the Biden administration's thoughtless behavior and stupidity. America will

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<v Speaker 2>once again build a dominant copper industry. The thing is

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<v Speaker 2>boosting US copper production is unlikely to be easy.

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<v Speaker 3>I can tell you it takes ten to twenty years

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<v Speaker 3>to get a mine from Okay, here's the deposit to

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<v Speaker 3>We're now rolling off commercial scale copper to the biggest

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<v Speaker 3>wire companies in the United States.

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<v Speaker 2>Take a mine out in Arizona called Resolution Copper as

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<v Speaker 2>an example. It assumed control of the historic Magma mine

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<v Speaker 2>in two thousand and four and began the permitting process

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<v Speaker 2>about ten years later.

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<v Speaker 3>It has faced so many hurdles. It's a copper owned

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<v Speaker 3>by Rio Tinto and part owned by BHP, big conglomerate,

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<v Speaker 3>the two biggest miners on planet Earth. So this is

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<v Speaker 3>a very serious deposit. If that mine were to start tomorrow,

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<v Speaker 3>it won't it would be able to push out the

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<v Speaker 3>equivalent of one quarter of US demand of copper just

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<v Speaker 3>from that mine. So it's a big deal and it

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<v Speaker 3>is still trying to get to production.

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<v Speaker 2>Here's the CEO of Rio Tinto on Bloomberg Television last year.

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<v Speaker 4>You're still dealing with just the permitting of this project.

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<v Speaker 2>When could we actually see it working.

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<v Speaker 4>Yeah, it's a long process.

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<v Speaker 2>So we are talking towards the end of the decade

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<v Speaker 2>that we can have production.

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<v Speaker 3>And that's the problem with mines. President United States says

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<v Speaker 3>do this now. That'd be great, but you have permitting processes.

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<v Speaker 3>And even if the President United States were to just

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<v Speaker 3>completely obliterate the permitting processes, you also have communities. Resolution

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<v Speaker 3>has had so much trouble getting up off the ground

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<v Speaker 3>because it is built next to an indigenous sacred site.

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<v Speaker 3>And that's just one example of the fights you will face.

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<v Speaker 3>It doesn't matter if you're on a red state or

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<v Speaker 3>a blue state. You do not like mines or big

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<v Speaker 3>manufacturing facilities in your backyard.

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<v Speaker 2>Nimby, not in my backyard.

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<v Speaker 3>Not my backyard. And like this is not just like

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<v Speaker 3>an American thing. This is people nimby in particular to

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<v Speaker 3>industrial activity is everywhere, and there is no expert in

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<v Speaker 3>this space that I have spoken to who thinks these

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<v Speaker 3>tears will go into place. And suddenly you're going to

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<v Speaker 3>see copper mind projects coming up on the list. You're

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<v Speaker 3>probably just gonna have a situation where Freeport mcmaran and

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<v Speaker 3>Rio Tinto continue to produce in the United States at

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<v Speaker 3>the same pace that they have, maybe a little bit more,

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<v Speaker 3>and you're going to remain dependent on half of your

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<v Speaker 3>copper coming from outside the country, and that copper will

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<v Speaker 3>be more pricey. And then we deal with the fallout.

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<v Speaker 2>Fallout that has already started. There are three different categories

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<v Speaker 2>of copper rack copper, refined copper, and semi finished copper

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<v Speaker 2>products things like wires, metal sheets, tubes, and plates. And

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<v Speaker 2>the president's announcement immediately raised questions about what would be tariffed.

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<v Speaker 3>Are you getting a tariff on raw copper? Are you

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<v Speaker 3>getting it on semi fabricated products like wire and tube

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<v Speaker 3>and copper faucets.

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<v Speaker 4>Out totally right?

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<v Speaker 3>And then like what about scrap, because you know, the

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<v Speaker 3>least cost ton to make new copper is scrap copper.

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<v Speaker 3>It's a great thing about metal, like you just once

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<v Speaker 3>you're done with it, you pull it out, you can

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<v Speaker 3>remelt it down to molten liquid, and then you can

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<v Speaker 3>recast it with other copper and it's new copper.

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<v Speaker 2>Joe says, the President has answered some of those questions.

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<v Speaker 2>He's reported those fifty percent tariffs will include both refined

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<v Speaker 2>and semi finished copper. Refined copper is widely used in

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<v Speaker 2>electrical grids, construction, car manufacturing, and consumer electronics, while sem

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<v Speaker 2>i finished copper is important to the military industrial supply chain.

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<v Speaker 2>After the break, Joe explains how copper suppliers are rushing

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<v Speaker 2>to beat the president's August first deadline, plus what this

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<v Speaker 2>tariff tells us about how the administration plans to approach

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<v Speaker 2>tariffs on other sectors. In the past week, as news

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<v Speaker 2>about President Trump's copper tariff has thrown producers and traders

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<v Speaker 2>for a loop, we've seen some winners emerge commodity traders, miners,

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<v Speaker 2>and banks that have managed to ship copper to the

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<v Speaker 2>US ahead of August first, when the tariff is scheduled

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<v Speaker 2>to be put in place. The value of the metal

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<v Speaker 2>has skyrocketed. Some traders have described getting more than one

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<v Speaker 2>thousand dollars on every ton of copper, which is more

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<v Speaker 2>than ten times what it usually goes for.

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<v Speaker 3>I talked to one of my shipping sources and they said,

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<v Speaker 3>you heard about right, You heard about Puerto Rico, right,

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<v Speaker 3>And I was like, well, what do you mean. He

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<v Speaker 3>goes people are already shipping metal on the water on

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<v Speaker 3>boats to those locales because they can't get to the

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<v Speaker 3>mainland in time, or they're concerned they won't get to

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<v Speaker 3>the mainland in time. And I said, well, like, is

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<v Speaker 3>that a problem? And the best answer he gave me was, well,

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<v Speaker 3>think about it. Not every harbor or not every dock

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<v Speaker 3>is prepared to handle copper. And why is that important?

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<v Speaker 3>Because copper is one of the most valuable products that

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<v Speaker 3>thieves like to take out of warehouse.

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<v Speaker 2>Is that right?

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<v Speaker 3>Yeah, like you hear every I feel like every few

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<v Speaker 3>years there's a story that comes out that's like the

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<v Speaker 3>copper from X was stripped out of this thing, and

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<v Speaker 3>you know it was a big heist and somebody made

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<v Speaker 3>a lot of money off of it. Copper per pound

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<v Speaker 3>is at about five dollars and fifty cents, and you know,

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<v Speaker 3>if you can strip it out or if you can

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<v Speaker 3>steal it in cathode form.

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<v Speaker 4>You're gonna make a pretty penny.

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<v Speaker 3>And so he said, listen, the guys in Hawaii don't

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<v Speaker 3>handle copper imports. So one of the struggles that shippers

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<v Speaker 3>and brokers are going to have to do is call

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<v Speaker 3>up the dock and say, you have to handle this

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<v Speaker 3>with care, and there has to be security around this

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<v Speaker 3>copper because it's going to be sitting in your port

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<v Speaker 3>for X period of time.

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<v Speaker 2>That copper is already piling up in port cities like

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<v Speaker 2>New Orleans, which is getting increasingly close to capacity. The

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<v Speaker 2>sudden push to get copper to the US as quickly

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<v Speaker 2>as possible has also left places like China with dangerously

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<v Speaker 2>low inventory. It's just the latest example of how the

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<v Speaker 2>US president's actions have caused turmoil in the global economy.

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<v Speaker 2>And in that same cabinet meeting last week, President Trump

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<v Speaker 2>previewed another tarif announcement in a way that seemed off

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<v Speaker 2>the cuff.

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<v Speaker 1>And we'll be announcing something very soon on pharmaceuticals. We're

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<v Speaker 1>going to give people about a year a year and

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<v Speaker 1>a half to come in, and after that they're going

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<v Speaker 1>to be tariffed if they have to bring the pharmaceuticals

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<v Speaker 1>into the country, to drugs and other things into the country,

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<v Speaker 1>they're going to be tarriffed at a very very high rate,

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<v Speaker 1>like two hundred percent.

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<v Speaker 2>I asked Joe what we know about how those tariffs

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<v Speaker 2>and pharmaceuticals could play out and how they're part of

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<v Speaker 2>a broader strategy when it comes to sectoral tariffs, levies

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<v Speaker 2>that aren't specific to countries but to whole sectors.

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<v Speaker 3>I was talking to a trade lawyer some weeks ago

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<v Speaker 3>who said, look at pharmaceuticals.

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<v Speaker 4>And copper and rare earths.

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<v Speaker 3>And these are all the Section two thirty two's, among

0:13:34.840 --> 0:13:38.440
<v Speaker 3>many others right now lumber that are being researched by

0:13:38.440 --> 0:13:39.480
<v Speaker 3>the Commerce Department.

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<v Speaker 2>And these are tariffs that the president could put in

0:13:40.880 --> 0:13:42.280
<v Speaker 2>place on national security grounds.

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<v Speaker 4>Correct, that's exactly right.

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<v Speaker 3>The law passed during the Kennedy administration back in nineteen

0:13:47.200 --> 0:13:50.400
<v Speaker 3>sixty two. This trade lawyer said, we call these the

0:13:50.480 --> 0:13:56.000
<v Speaker 3>problem child trade issues. There's a reason Trump didn't touch

0:13:56.040 --> 0:13:57.920
<v Speaker 3>all of these with Section two thirty two during his

0:13:57.920 --> 0:14:00.240
<v Speaker 3>first term. He only did steal an aluminum, and that's

0:14:00.240 --> 0:14:03.079
<v Speaker 3>because steel and aluminum are actually pretty easy to fit

0:14:03.120 --> 0:14:06.400
<v Speaker 3>into that law, which is there's a national security importance

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<v Speaker 3>to those two different products.

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<v Speaker 2>Got to build ships, go, yeah, yeah.

0:14:09.760 --> 0:14:13.000
<v Speaker 3>It's pretty straightforward, like steal is steel and aluminum is aluminum,

0:14:13.080 --> 0:14:18.920
<v Speaker 3>and like it's easy to implement, But pharmaceuticals and lumber

0:14:19.760 --> 0:14:24.840
<v Speaker 3>and copper are far more complex. And I think the

0:14:24.880 --> 0:14:28.040
<v Speaker 3>struggle right now inside the Commerce Department is they're trying

0:14:28.040 --> 0:14:30.200
<v Speaker 3>to get it right. They're trying to figure out how

0:14:30.240 --> 0:14:33.960
<v Speaker 3>they get around these nuances, and I think the career

0:14:33.960 --> 0:14:38.960
<v Speaker 3>officials are saying, it's just not one number, it's just

0:14:39.040 --> 0:14:41.760
<v Speaker 3>not one policy that will solve this issue.

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<v Speaker 2>Is there a commensurate amount of fear in that industry

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<v Speaker 2>to what we're seeing in the metals industry as well?

0:14:47.080 --> 0:14:49.040
<v Speaker 2>About what that would mean if you saw two hund

0:14:49.040 --> 0:14:51.520
<v Speaker 2>percent tariffs on pharmaceutical ingredients, right.

0:14:51.640 --> 0:14:51.920
<v Speaker 4>Yeah.

0:14:52.040 --> 0:14:53.600
<v Speaker 3>One of these trade sources told me is, like, do

0:14:53.640 --> 0:15:00.720
<v Speaker 3>you think Pfizer really wants to worry about producing generic drugs? Like, no,

0:15:01.240 --> 0:15:04.880
<v Speaker 3>they don't. It's low margin. They'll lose money making these things.

0:15:04.880 --> 0:15:07.440
<v Speaker 3>And like there's a reason this is like so many

0:15:07.440 --> 0:15:10.920
<v Speaker 3>other things. Why did X industry go abroad, you know,

0:15:11.000 --> 0:15:13.560
<v Speaker 3>to India or to China or wherever.

0:15:13.240 --> 0:15:13.680
<v Speaker 4>It might be.

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<v Speaker 3>Well, because smart people in the United States said, this

0:15:17.320 --> 0:15:20.120
<v Speaker 3>is not worth it for us to do this thing anymore.

0:15:20.200 --> 0:15:22.280
<v Speaker 3>There's no profit there, or if there is a profit,

0:15:22.400 --> 0:15:24.920
<v Speaker 3>it's such a slight margin that we feel like we're

0:15:24.920 --> 0:15:27.880
<v Speaker 3>wasting our time, in our shareholder's time.

0:15:28.080 --> 0:15:30.600
<v Speaker 2>Could you talk about the broad strategy here. There's been

0:15:30.640 --> 0:15:32.920
<v Speaker 2>so much focus in recent weeks on these country by

0:15:32.960 --> 0:15:36.000
<v Speaker 2>country trade policies. We've seen the letters, we've heard the

0:15:36.000 --> 0:15:39.400
<v Speaker 2>president's threats, and now we have these sectoral tariffs. How

0:15:39.440 --> 0:15:42.960
<v Speaker 2>does that fit into the president's broader trade strategy? Is

0:15:43.240 --> 0:15:45.520
<v Speaker 2>it being forced in effect by this court decision that

0:15:45.560 --> 0:15:48.200
<v Speaker 2>we saw a few weeks ago that by using the

0:15:48.240 --> 0:15:51.200
<v Speaker 2>Section two thirty two, this National security law, they're an

0:15:51.200 --> 0:15:53.280
<v Speaker 2>effect easier for him to put in place and have

0:15:53.280 --> 0:15:55.040
<v Speaker 2>confidence that they'll stay in place.

0:15:55.160 --> 0:15:56.680
<v Speaker 4>That's absolutely correct.

0:15:56.960 --> 0:16:00.320
<v Speaker 3>I spoke to Wilbur Ross, the former Commerce secretary under

0:16:00.360 --> 0:16:03.880
<v Speaker 3>Trump's first administration, some months ago, right when the president

0:16:04.000 --> 0:16:06.480
<v Speaker 3>took office, and I asked him, like, is Trump going

0:16:06.520 --> 0:16:09.040
<v Speaker 3>to go ahead with tariffs? And what Barros said, The

0:16:09.080 --> 0:16:12.440
<v Speaker 3>President knows he can use Section two thirty two tariffs

0:16:12.480 --> 0:16:16.520
<v Speaker 3>in Section three oh one tariffs, and the courts won't

0:16:16.560 --> 0:16:20.640
<v Speaker 3>stop him because the courts already heard the cases in

0:16:20.680 --> 0:16:23.240
<v Speaker 3>Trump one point zero and said yes, three oh one

0:16:23.280 --> 0:16:26.800
<v Speaker 3>and two thirty two are written into US law and

0:16:26.840 --> 0:16:29.240
<v Speaker 3>allows the President of United States to utilize these on

0:16:29.640 --> 0:16:30.840
<v Speaker 3>grounds of national security.

0:16:32.120 --> 0:16:33.880
<v Speaker 2>Joe says, it's hard to say how it's going to

0:16:33.920 --> 0:16:37.960
<v Speaker 2>play out and if these tariffs will actually have staying power.

0:16:38.160 --> 0:16:41.320
<v Speaker 3>Once the tariff is implemented, and how does it actually

0:16:41.320 --> 0:16:46.560
<v Speaker 3>affect purchasing, How does it actually affect potential inflation, How

0:16:46.640 --> 0:16:50.600
<v Speaker 3>does the President and his team react to that, and

0:16:51.480 --> 0:16:56.040
<v Speaker 3>where do they feel generous in giving some sort of

0:16:56.040 --> 0:17:00.160
<v Speaker 3>break or or the opposite.

0:17:01.560 --> 0:17:04.000
<v Speaker 2>This is the Big Take from Bloomberg News. I'm David Gura.

0:17:04.359 --> 0:17:06.760
<v Speaker 2>To get more from The Big Take and unlimited access

0:17:06.840 --> 0:17:10.160
<v Speaker 2>to all of Bloomberg dot com, subscribe today at Bloomberg

0:17:10.160 --> 0:17:13.680
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0:17:13.800 --> 0:17:15.840
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0:17:18.640 --> 0:17:19.399
<v Speaker 2>Thanks for listening.

0:17:19.560 --> 0:17:20.480
<v Speaker 4>We'll be back tomorrow.