Trump's copper tariffs pile more metal misery on US car industry

TimesLIVE

14-07-2025

Suppliers pass on some costs
After a chaotic week in the copper market, suppliers to carmakers have asked their customers to pay more for their product because they cannot afford the additional costs, experts said.
A source at a major car supplier in the US market said the company had seen "meaningful" impact from elevated copper, aluminium and steel prices. This creates commercial friction and structural cost gaps, said the source, who spoke on condition of anonymity because they were not authorised to discuss the issue publicly.
Even before a tariff takes effect, users are paying more for their US copper. Takashi Imamura, an executive officer at Japanese trading house Marubeni said a copper tariff would mean higher costs for US consumers.
"When they (the US government) reconsider the damage, my final expectation is they will reduce or eliminate the tariffs," Imamura said.
Parts suppliers are feeling the squeeze. Melanie White, president of suspension parts maker Hellwig Products, said steel prices have quadrupled since 2018. Steel tariffs have caused a rush to source from US providers, making it harder to secure supplies.
White said the roughly 50-person business has cut costs by putting off equipment purchases or not rehiring for some vacant positions.
"It has affected a lot of things," she said.
Costas Benchmark's De Jonge said at pre-tariff rates, steel, aluminium and copper accounted for around 5% of a vehicle's production costs in the US. With tariffs, that rises to up to 9%, he said.
Based on estimates from Cox Automotive and Benchmark Mineral Intelligence on tariffs in place combined with the planned copper rates, the US car industry would pay on average minimum duty of $1,700 (R30,538) for every car made in the US and $3,500 (R62,873) per car imported from Canada and Mexico that complies with the USMCA trade deal.
It would be as much as $5,700 (R102,395) for every car imported from elsewhere. The numbers add up fast in a low-margin industry where the average US new vehicle selling price in June hit $46,233 (R830,538), according to consultancy JD Power.
Consultancy CRU Group estimated the average combustion-engine or hybrid car requires about 24kg of copper, while the average fully-electric car needs around 59kg. Dan Hearsch, global co-leader for automotive and industrials at consultancy AlixPartners, said supplier agreements tend to be indexed to copper prices and revised every few months.
However, the spike in copper prices last week has forced car suppliers to go to customers and "we need to talk about this on top of all our other tariff conversations'," Hearsch said.
Some in the industry remain skeptical the copper tariff will be implemented.
Trump has a history of delaying or walking back tariff threats. Andy Leyland, co-founder of supply chain specialist SC Insights, said a copper tariff would likely be short-lived because higher inflation caused by border taxes will collide with the reality of the US political calendar. where midterm elections will be held in November 2026.
"Most Americans don't give a damn about foreign policy," Leyland said.