An executive order from Trump has directed the Commerce Department to investigate potential tariffs on copper to support the US copper industry. The Commerce Secretary, Lutnick, announced that there will be no exemptions or exceptions in this inquiry.

The investigation will focus on various copper-related products, including raw mined copper and its derivatives, under Section 232 regarding national security. Trump’s trade adviser, Navarro, indicated concerns about China’s control over the copper market due to industrial overcapacity and dumping practices.

The White House has noted that while tariffs are preferred over quotas, it is too early to discuss specific tariff levels. Predictions regarding demand from electric vehicles and AI suggest forthcoming copper shortages, prompting a swift investigation, although no timeline has been specified.

The current administration has made it clear that domestic copper production is now a priority. With shortages anticipated due to the growth of electric vehicles and artificial intelligence, the decision to investigate possible tariffs is not unexpected. Lutnick’s firm stance on refusing exemptions ensures that this will be a comprehensive review, rather than one perforated by loopholes or special treatment.

Navarro’s statements shed light on the reasoning behind this push. Concerns about China’s trade practices are not new, but copper adds another layer to the issue. The focus on industrial overcapacity and potential dumping implies that the administration sees this as more than just an economic competition. If foreign producers, particularly those heavily subsidised by their governments, continue to export at artificially low prices, domestic mining and refining operations may struggle to remain profitable. That, in turn, could raise concerns about long-term reliance on overseas suppliers.

The absence of immediate details regarding tariff levels suggests that policymakers are still assessing their approach. However, a clear preference has already been expressed: tariffs, rather than quotas, are the likely tool of choice. Historically, tariffs allow for more flexibility, adjusting pricing rather than imposing strict quantity limits. This means that businesses relying on copper will not face hard supply constraints but could see rising costs if new duties are implemented.

Given the combination of expected demand growth and policy uncertainty, upcoming weeks could see shifts in pricing and sentiment. The lack of a defined timeline for the review adds to the unpredictability. If the market begins to speculate on possible outcomes, movements in futures contracts may reflect those changing expectations.

For those making decisions based on market fluctuations, keeping a close eye on communications from the Commerce Department and the White House will be important. Any indication of a potential tariff rate or a projected completion date for the inquiry could affect both short-term positioning and longer-term strategies.