Trump's copper war is an insane act of self-harm

Telegraph

18-07-2025

The battle for global mastery of electric technologies and artificial intelligence will be decided over the next five to 10 years.
Any country that deprives itself of copper at competitive prices will slip down the global economic rankings. It will be pushed progressively to the sidelines in the Age of Big Shovels, as the post-fossil world is called by Daniel Yergin, author of The New Map: Energy, Climate, and the Clash of Nations.
The International Energy Agency (IEA) says China accounted for 60pc of total global demand for copper last year, far ahead on the way to becoming the first electro-superpower. The US accounted for just 6pc.
That one figure tells you to what degree the world is already splitting into two divergent camps: one doubling down on electrification, and the other doubling down on fossils. But whatever your views on energy, both camps are going to need a lot of copper for other reasons.
Almost 20 years ago, geologists at Yale published a paper for the Proceedings of the National Academy of Sciences warning that the world had already lost 26pc of all the extractable copper in the Earth's crust, either lost to air from grinding or buried in landfills.
They doubted that there would be enough ore left for the developing world to replicate our living standards.
I remember it well because I interviewed the lead scientist and reported the story in The Telegraph. That 'peak copper' scare proved premature. Asia has since industrialised and we have not run out of copper. But the underlying point is still valid. There are limits.
The IEA says the world is already in the early stages of a structural supply crunch. The copper deficit will keep growing because demand is rising and good ore is hard to find. Some 239 deposits were discovered between 1990 and 2023, but only 14 were found over the last decade, and they are not the biggest. 'It's time to sound the alarm,' says Fatih Birol, the IEA's director.
The best rock is depleted. The average grade of copper mines has decreased by 40pc since 1991. Output has held up because of new tricks in solvent extraction and 'electrowinning'. But it is becoming ever more expensive to extend the life of old brownfield projects. Capital costs have jumped by 65pc over the last five years.
It currently takes an average of 18 years to produce the first marketable copper from a new project – or 29 years in the US, where planning permission takes a decade, and the only quarrying done is by lawyers mining legal briefs.
Donald Trump's mystifying answer to this is to announce 50pc tariffs on imports of the metal from Aug 1, under the national security '232' clause that does not require approval by Congress.
'This is our Golden Age – we will rebuild a DOMINANT Copper Industry,' he posted on Truth Social.
'Copper is necessary for semiconductors, aircraft, ships, ammunition, data centres, lithium-ion batteries, radar systems, missile defence systems and even hypersonic weapons, of which we are building many.'
Most copper is in fact used in construction, grids, air-conditioners, fridges, TVs, and day-to-day electronics, but that would not justify a weaponised '232' tariff.
The chief effect of a 50pc tax on copper inputs, the raw material of the modern economy, is to push up prices and render US industry even less competitive in the global market.
However, it does choke US demand for copper and therefore frees up more scarce supply for everybody else, especially for China, but also for Ed Miliband's clean power blitz, as my colleague Hans van Leeuwen wrote earlier this week. Even in the surreal world of Trump's tariffs, this one leaves you open-mouthed.
The US currently imports half its copper. The intelligence unit at S&P Global says the US has 70m metric tons of untapped reserves, enough to cover 20 years of national demand. That is purely theoretical.
Rio Tinto's Resolution copper project on a sacred Indian site in Arizona has been blocked for years by the Apache tribes. The Supreme Court gave it a green light last month – refusing to even listen to the Apaches' appeal – but it will take another eight years or so to bring the mine on stream.
The other big project is Pebble Bay in Alaska. That has been blocked by the Environmental Protection Agency because of threats to pristine salmon waters. The MAGA movement is rooting for the salmon in this dispute. Donald Trump Jr likes to fish there, and broadcaster Tucker Carlson is a voice for the #StopPebbleMine movement.
Hardliners will ram it through eventually but Pebble Bay will not be producing copper in any meaningful time-horizon. S&P Global says America will still rely on imports for 30pc of its copper by 2035 even if all key projects are given fast-track permits and rushed into operation.
By then technology will have moved on and the copper scare will probably be over. Superconductors, dielectric waveguides, atom-thick graphene chips made from cheap methane, will all be eating into copper demand.
So will carbon nanotubes, now starting to match the conductivity of copper, and with greater tensile strength. The cost is plummeting, in the manner of Moore's Law. Korean scientists have just built a metal-free electric motor with carbon nanotubes that cuts weight by 80pc.
The critical window for the global electro-tech race is right now. Trump is deliberately blowing up America's EV and clean-tech sectors. But he still needs the cheapest copper possible to stay level in everything else. The US could start by wasting less of what it does have. S&P Global said the country's copper recycling rate has fallen to 6pc from 16pc in the 1990s.
Some 70pc of US copper imports come from Chile, and most of the rest from Canada and Mexico. These are friendly states. A rational policy would be to lock in that supply by tight alliances rather than kicking these countries in the teeth.
The US has just two primary copper smelters left. A once mighty industry has long been in a death spiral, unable to compete on the world market. The way to stop China increasing its stranglehold yet further on refined copper is to revive mothballed US smelters and build new ones at $700m a shot.
That means showering companies with tax credits in a variant of Joe Biden's Inflation Reduction Act. It means building consensus on Capitol Hill. It means grit and consistency, not daily reversals by a president who changes his mind with the weather. Even if everything went right it would take a decade to start to regain autonomy in copper smelting. By then China will already be fully electric.
Trump has his sequencing backwards. He picked a fight with China before establishing a US supply chain for rare earth minerals, and has now discovered the scale of his error. He has been forced to retreat and send China the Nvidia H20 chips it wants, and much else besides, just to get the rare earths moving again.