Copper, Aluminium, Steel: The Unexpected Backbone of Trump’s MAGA

Trump’s 50% Duties on Key Metals: More Than Just Economics

Economic Motives Intertwined With Political Goals

By levying a half‑price burden on steel, copper, and aluminium, President Trump is re‑asserting American manufacturing while simultaneously igniting his enthusiastic MAGA base.

Reviving Domestic Industries

• Targets pricey foreign imports that have undercut U.S. producers.
• Creates a protective shield for domestic metallurgical companies facing global competition.
• Aims to bring jobs back to regions that have felt the sting of outsourcing.

Political Rallying Cry

The tariffs serve as a symbolic statement of ownership, reassuring supporters that the administration is taking concrete actions to restore national pride and economic self‑reliance.

US Tariff Curve: Trump Seeks to Reshape Metal Industry

Political Motivation for the Levies

President Trump has announced additional 50% tariffs on all imports of steel, copper, and aluminium—an effort that extends beyond pure economics. According to senior FX analyst David Stritch of Caxton, the primary driver for raising tariffs on base production inputs is political: a desire to challenge the shift of manufacturing away from the United States toward Chile for copper and China for steel and aluminium.

Industry Beginnings and National Security Claims

• Steel and aluminium are framed as the backbone of American strength, essential for both economic survival and national security.
• In 2018, Trump emphasized the importance of a robust domestic metal industry, claiming it was vital to the nation’s security.
• He declared that an industry sustained by fair trade practices is crucial, citing long-term issues of plant closures and layoffs caused by unfair foreign competition.

Copper Import Dynamics and Price Movements

The United States relies on about half of its copper needs from overseas, predominantly Chile and Canada. Market reactions have been swift:

• On the day before the August 1 implementation deadline, copper futures fell 20% to around $4.55 per pound.
• This surprised investors after the sharp rise in July that followed the tariff announcement.

Notably, the newly imposed duty will exclude copper concentrate and cathodes, allowing these raw materials to enter the U.S. market without additional costs. However, processed forms such as wire, pipes, and sheeting remain subject to the levies.

Impact on Steel and Aluminium Sectors

Doubling the tariff on steel and aluminium from 25% to 50% has:

• Significantly increased domestic metal prices.
• Reduced the competitiveness of foreign imports.
• Injected volatility into manufacturing supply chains.

These shifts impose higher input costs and lower availability, prompting American firms to consider reshoring and redesigning their supply chains.

Will Local Production Pick Up?

History suggests a mixed picture:

• By 2024, U.S. steel output was 1% lower than in 2017—the year before the initial tariffs.
• Aluminium production had fallen nearly 10% since the first tariff introduction.

Recent analyses indicate these tariffs could raise manufacturing expenses by up to 4.5%, particularly affecting narrow‑margin sectors such as electric vehicles and household appliances, and potentially delaying investment in key U.S. manufacturing hubs.

Industries ‘snatched away’ from the US

From American Copper Power to Chilean Supremacy

The United States held the world’s top position in copper production throughout most of the 20th century. That dominance ended when Chile surged ahead, becoming the largest global copper producer – a status the U.S. still has not reclaimed. Today, Chile’s output remains unrivaled on the world stage.

Steel: The 1970s Peak and the Outdated Industrial Core

• Peak era – U.S. steel production hit its apex in the early 1970s.
• Prolonged decline – subsequent decades brought a steady collapse, amplified by multiple recessions.
• International competition – Japan, South Korea, and European nations introduced cheaper, leaner production methods that outpaced high‑cost U.S. integrated mills.
• Currency effect – a strong dollar made imported steel far more attractive, leaving domestic plants burdened with aging equipment, expensive labor contracts, and growing environmental compliance costs.

These forces caused the collapse of the steel towns that once thrived across the Eastern seaboard and the Midwest. Even with federal attempts to keep them afloat, the region—now famously dubbed the Rust Belt—continues to be a testament to long‑established industrial erosion.

Aluminium: A Shift from American Lead to Chinese Rise

Throughout the 20th century, the U.S. led global aluminium production largely because of cheap electricity and a robust domestic demand from defence, aerospace, and automotive sectors. In the early 2000s, China overtook the United States, beginning a new era of aluminium supremacy.

Political and Social Consequences

According to Stritch, the Trump administration’s core supporters—primarily blue‑collar, non‑college‑educated men—saw a steep decline in job opportunities, largely due to the offshoring that reduced domestic production capacities. This dynamic underscores the broader economic implications for workforces that once depended heavily on steel, copper, and aluminium manufacturing.

Related Focus: Copper Prices Near All‑Time Highs

Trade tensions, tariff threats, and stimulus measures continue to influence market dynamics as the U.S. faces potential 50% tariffs on copper imports, placing significant global industry pressure on suppliers and retailers alike.

Increasing costs, especially in green-adjacent industries

Impact of Trump’s 50% Tariffs on Copper, Steel and Aluminium

Industries Most Affected

Major Sectors Using the Metals

• Copper – essential for power transmission, solar panels and battery connectors.
• Steel – foundational for construction, infrastructure and defence equipment.
• Aluminium – key component in lightweight vehicle bodies and renewable‑energy systems.

Why the U.S. Manufacturing Base Faces the Hardest Hit

As Trent Stritch notes, these metals are “used extensively from solar panels to car batteries,” so the U.S. sector where they’re most plentiful is likely to feel the shock first. Production costs rise sharply when imports are hit with steep tariffs.

Electric Vehicles and Renewable Energy at a Critical Junction

Electric‑vehicle makers and renewable‑energy installers already operate on razor‑thin margins. Stritch extrapolates that the combination of:

• High tariffs on source materials, and
• The current economic fragility of the EV market, and
• Heavy dependence on copper, steel, and aluminium,
• Low industry profit averages (around 5 %),

could drive EV producers into the most painful position.

Projected Consequences for the EV Market

• Increased material costs could push vehicle prices up.
• Some manufacturers may divert focus to more profitable segments.
• Long‑term supply chain realignments are likely as firms seek lower‑cost alternatives.

Looking Ahead

With tariffs set to remain in place, U.S. firms in construction, defence, and green tech will need to evaluate alternative sourcing strategies, streamline production processes, and lobby for policy adjustments to mitigate the fiscal burden.