Canada will be spared from 50% copper tariff as U.S. targets China, expert says

Michael Dobner, National Leader of Economics & Policy Practice at PwC Canada, joins BNN Bloomberg to discuss the impact of tariffs on Canadian commodities.

As the United States plans to impose hefty tariffs on semi-finished imported copper products Friday, an economic and policy analyst says Canada will be spared from duties for now as the U.S. targets Chinese producers.

U.S. President Donald Trump said he will impose a 50 per cent tariff on copper pipes and wiring to boost manufacturing of the red metal in America. Canadian producers however will be exempt from the surcharge developed to take aim at Chinese manufacturers as Canada does not produce copper pipes, tubes, wires, sheets and rodes, that are subject to tariffs. Canadian producers instead created refined copper products such as copper concentrate, anodes and cathodes that are spared.

“My assessment of the situation is that the U.S., from a strategic standpoint, is looking to develop its copper processing industry, which is very limited,” Michael Dobner, national leader of economics and policy practice for PwC Canada, told BNN Bloomberg in a Thursday interview. “Currently, copper, raw copper and refined copper is not a big issue for the U.S. or for Canada. The big issue is that most of the processing is done in China, and if you want to decouple from China, you have to build capacity in the U.S. or North America. That’s a long road, but that’s what this tariff is trying to target.”

The surprise move dragged down U.S. copper prices more than 17 per cent on the Comex exchange and unwound a premium over the London global benchmark that had grown in recent weeks, with shipments diverted there in anticipation of higher domestic prices.

Trump first teased the copper tariff in early July, implying that it would apply to all types of the red metal, ranging from cathodes produced by mines and smelters to wiring and other finished products. However the White House has since said the tariff will apply only to pipes, tubes and other semi-finished copper products, as well as products that copper is heavily used to manufacture, including cable and electrical components. Dobner sees the decision as a positive for Canada, which primarily exports raw and refined copper, not semi-finished products.

“Canadian exports to the U.S. are, by and large, raw copper and refined copper, and therefore this is, in a way, good news for Canada, because it doesn’t export much of the semi finished,” said Dobner.

Canadian mines produced 508,250 tonnes of copper in concentrate, with nearly half originating from British Columbia in 2023, according to Natural Resources Canada. Canada’s exports of copper and copper-based products were valued at $9.3 billion. The United States was the largest importer of Canadian copper accounting for 52 per cent of the total export value, followed by China, at 17 per cent and Japan at 12 per cent in 2023.

The move aids manufacturers but does little to boost the constrained U.S. copper mining industry, which for years has asked Washington to permit reform or other steps that could fuel growth. The move is a boost for Chile and Peru, two of the world’s largest copper miners and major suppliers to the United States.

With files from Reuters