President Donald Trump announced plans on Tuesday to raise interest in the World Trade War and impose a 50% tariff on all imported copper, with a 20% tax on drugs being imposed immediately, and then increased a year later.
Speaking to CNBC shortly after the cabinet meeting, Commerce Howard Rutnick said he expected the investigation into copper imports in his department to be completed and that the collection would be “highly likely to be introduced between the end of July and August 1st.”
“The idea is to bring copper into the house, bring copper production into the house, and bring copper back into the United States, the key to the industrial sector,” Rutnick added.
Trump also showed that he would apply 200% higher tariffs on foreign drugs in about a year. “We’re going to be joining about a year, a year, half of the people. Then, if we need to bring medicines to the country at a very high rate, like 200%, they’ll get tariffs,” he said.
Finally, he warned that the August 1 deadline would be “no extensions.”
Trump’s divisional duties on copper and drugs, exempt from his drastic “liberation date” tariffs on April 2, are different from nationally-wide tariffs. The new 50% rate of copper coincides with the recently imposed tax on steel and aluminum products.
How relies on copper imports, and who will hurt customs duties?
very. The United States produces more than half of the refined copper it consumes every year. The remaining amount of shyness of 1 million tonnes is being imported.
More than two-thirds of American copper are mined in Arizona, and development of large-scale new mines has been delayed for more than a decade due to environmental concerns.
Trump has consistently framed metal tariffs as a way to counter China’s dominance over the global market, but in fact, the US imports most of its sophisticated copper from the US.
According to the US Geological Survey (USGS), Chile provided 65% of America’s refined copper imports in 2023, with Canada at 17% and Peru supplying 6%.
Maximo Pacheco, chairman of Chile’s state-run copper producer, Codelcom, said in response to Trump’s moves, “We need to see if this applies to all countries, or some of them, or some of them.”
How relies on drug imports, and who will hurt tariffs?
The US pharmaceutical industry is also highly dependent on imports.
In fact, almost half of the value of active pharmaceutical ingredients (APIs) in the US market was imported from overseas in 2021.
India supplies 18% of the US API. China, 13%. The rest comes mostly from the European Union.
At the same time, about 40% of the drugs ready to be consumed in the US are manufactured overseas (dominated by India, in a third of the total). Other countries, including Australia and Ireland, also rely on the US market for drug exports.
Countries that rely on the US market for drug exports can be worried.
For example, the US accounts for 38% of overseas cargo at Australian pharmacies.
Following Trump’s announcement, Australian treasurer Jim Chalmers told the Australian broadcasting company: “These are obviously development-related.
“Our pharmaceutical industry is much more exposed to the US market, which is why we are looking for more details on what has been announced — urgently,” Chalmers said.
How does the US compare with China for copper and pharmaceuticals?
copper
The US is the second largest copper consumer in the world, but the majority of miners process copper in China and other parts of Asia.
China is the world’s largest consumer of copper, with its global copper demand share of over 50%. However, unlike the US, much of its copper is handled by local businesses.
Most of China’s 23.4 million tonnes of copper concentrate imports also come from Chile, Peru and Mexico.
Meanwhile, China’s biggest export destinations of copper products are Thailand, Vietnam and South Korea.
From a copper capacity standpoint, China’s copper smelting sector includes extracting red metals by heating to high temperatures, but warns everything else, including the US.
According to the USGS, China had dozens of copper smelters operating in 2024, but the US only has two major copper smelters.
Compared to China, the US copper sector also claims relatively high energy costs, lower smelting capacity, and reduced government support.
Additionally, Chinese companies often own their own mines, smelters and assembly units, reducing transaction costs and streamlining logistics.
Pharmaceuticals
The United States is home to the world’s largest pharmaceutical industry due to its production value (i.e. the total monetary value of manufactured drugs), and recorded China and Germany well ahead of the board in 2023 with around $600 billion.
Nevertheless, in 2024, it was necessary to import $212 billion in medicine. In particular, Trump’s tariffs can be seen as an effort to boost domestic API production, as the US relies heavily on imports of APIs from India and China.
However, some economists have warned that increased tariffs on APIs will hurt American patients in the form of higher drug costs.
Additionally, it can take many years to build new manufacturing facilities to boost domestic production. Industry experts warn that the country’s infrastructure is currently not equipped to process new API factories.
“There are over 400 major ingredients or APIs that need to be produced to fully integrate. The US has no HR resources since Big Pharma left API manufacturing 20 years ago. [to achieve lower production costs]”Stanley Chao, managing director of all consulting, spoke to the Biospace website.
How did the market respond to the announcement of new tariffs?
Reusing renewable power and transportation systems to implement renewable energy requires more refined copper than the US companies that can now supply them.
Metals are essential for the production of electric vehicles, military hardware, the power grid, and many consumer goods. Therefore, Trump’s higher tariff threats could disrupt supply flows.
For this reason, future copper contracts (standard gauges for metal prices) surged to record highs of over 12% after Trump announced planned tariffs.
The drugmaker’s S&P 500 index fell slightly after Trump’s comments, but shares in Elily, Merck and Pfizer fell amid fears about a potential blow to sales.
But the overall financial market response to Trump’s changing tariff landscape has remained calm so far, unlike the chaos that greeted his “liberation day” tariffs in early April.
Is this another example of tacos?
Global financial markets are “desensitized” to Trump’s tariff moves, according to Carol Fong, CEO of CGS International Securities Group.
Speaking on a panel at the next Reuters Asia Summit in Singapore on Wednesday, she said investors were not responding strongly to changes in tariffs and announcements.
“Look at what has happened in the last two days. [deadline] It expired and the market did not respond badly. I think the market itself was a bit insensitive,” Fong said.
In fact, investors have established the name of the president’s policy flip-floping. It’s called the taco theory: “Trump always drives out chickens.”
Washington is not highly tolerant of economic pressures as the theory progresses, and will soon retreat as tariffs cause pain.
Marketwatcher will look at copper and medicines to see if Trump is using his familiar playbook for the next few months.
