President Donald Trump's vow of tariffs on U.S. copper and aluminium imports would result in higher costs for local consumers because of a shortfall of domestic production and the length of time it would take to renew the industry, analysts and industry participants said on Tuesday, News.az reports citing Reuters.
In a speech to Republican lawmakers on Monday, Trump said he would impose the tariffs on aluminium and copper - metals that are needed to produce U.S. military hardware - as well as steel, to entice producers to make them in the United States.
"We have to bring production back to our country," he said.
Trump won the U.S. presidency in November vowing to lower costs for consumers still smarting from an inflation surge in the first half of his predecessor Joe Biden's term. However, analysts argue his plan for tariffs on imports to bolster the country's manufacturing sector, another of his promises, may undercut his price-cutting pledge.
It was not clear how broadly the tariffs could be applied, but several mining CEOs have previously said they are preparing for different scenarios as markets brace for a potential change to trade flows.
"There’s a few unknowns here. Will these tariffs be enacted, and at what scale, and who will pay? Ultimately they generally get paid by the consumer particularly in the case where there’s no domestic substitute," said analyst Daniel Morgan at Sydney investment bank Barrenjoey.
U.S. aluminium and copper smelters have been closing and would need new infrastructure and power contracts to restart, among other measures, all of which take time, he said.
Aluminium producers in Canada such as Rio Tinto (NYSE:RIO) and Alcoa (NYSE:AA) would be unlikely to take revenue hits, instead the costs would likely be rolled to automakers who would then pass them to U.S. consumers, he added. Rio Tinto declined to comment.
An Alcoa spokesperson pointed to comments from CEO William Oplinger from a results call last week that flagged the potential for "wide ranging effects on supply, demand and trade flows". He estimated that a 25% tariff on current Canadian export volumes to the U.S. could represent $1.5 billion to $2 billion of additional annual costs for U.S. customers.
An executive at India's top mining lobby group noted the U.S. is the biggest export market for its aluminium, and it expects India's government to take action by convincing Trump not to issue any levies.
"If Trump imposes tariffs, it will have an adverse impact particularly on aluminium because Europe is already on path to impose a carbon tax and the UK might do it too," said B.K. Bhatia, additional secretary general at the Federation of Indian Mineral Industries.
On copper, John Fennell, CEO of the International Copper Association Australia said any tariff on imports to the U.S. would impact its industry given the country is a net copper importer, although it may speed the development of new mines such as Rio Tinto's Resolution in Arizona.
"This could be good for new mines like Resolution but that is many years off, and the pain would be felt by local manufacturers paying the tariffs in the interim," he said.
In a speech to Republican lawmakers on Monday, Trump said he would impose the tariffs on aluminium and copper - metals that are needed to produce U.S. military hardware - as well as steel, to entice producers to make them in the United States.
"We have to bring production back to our country," he said.
Trump won the U.S. presidency in November vowing to lower costs for consumers still smarting from an inflation surge in the first half of his predecessor Joe Biden's term. However, analysts argue his plan for tariffs on imports to bolster the country's manufacturing sector, another of his promises, may undercut his price-cutting pledge.
It was not clear how broadly the tariffs could be applied, but several mining CEOs have previously said they are preparing for different scenarios as markets brace for a potential change to trade flows.
"There’s a few unknowns here. Will these tariffs be enacted, and at what scale, and who will pay? Ultimately they generally get paid by the consumer particularly in the case where there’s no domestic substitute," said analyst Daniel Morgan at Sydney investment bank Barrenjoey.
U.S. aluminium and copper smelters have been closing and would need new infrastructure and power contracts to restart, among other measures, all of which take time, he said.
Aluminium producers in Canada such as Rio Tinto (NYSE:RIO) and Alcoa (NYSE:AA) would be unlikely to take revenue hits, instead the costs would likely be rolled to automakers who would then pass them to U.S. consumers, he added. Rio Tinto declined to comment.
An Alcoa spokesperson pointed to comments from CEO William Oplinger from a results call last week that flagged the potential for "wide ranging effects on supply, demand and trade flows". He estimated that a 25% tariff on current Canadian export volumes to the U.S. could represent $1.5 billion to $2 billion of additional annual costs for U.S. customers.
An executive at India's top mining lobby group noted the U.S. is the biggest export market for its aluminium, and it expects India's government to take action by convincing Trump not to issue any levies.
"If Trump imposes tariffs, it will have an adverse impact particularly on aluminium because Europe is already on path to impose a carbon tax and the UK might do it too," said B.K. Bhatia, additional secretary general at the Federation of Indian Mineral Industries.
On copper, John Fennell, CEO of the International Copper Association Australia said any tariff on imports to the U.S. would impact its industry given the country is a net copper importer, although it may speed the development of new mines such as Rio Tinto's Resolution in Arizona.
"This could be good for new mines like Resolution but that is many years off, and the pain would be felt by local manufacturers paying the tariffs in the interim," he said.
