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Roula Khalaf, editor of the FT, selects her favorite stories in this weekly newsletter.
Uncle Sam has a copper problem. In very round numbers, the USA produces 1 million tons of red metal and consumes 2 million. The deficit is filled from overseas, creating a potential geopolitical susceptibility to security. But even in the USA there are plenty of copper to go smoothly, enough for the brave, rich and patient to extract it – especially if cheaper imports suddenly lose their charm. A case for tariffs.
At least that’s the logic from the White House. President Donald Trump has undertaken to make taxes for copper imports after identifying the metal as a critical input for American prosperity. This increased the price for copper futures on the US markets by almost a fifth on Tuesday. Of course, it is unlikely that a 50 percent tariff with a amazed blanket is the end result. Now the negotiations and capitions come.
There is a legitimate problem to solve. Copper is plentiful, but is increasingly expensive and difficult to extract. It has been obvious for years that an offer crisis will occur, with natural demand growth being reinforced by the transition to green energy and “electrification”. For example, an electric vehicle uses 2.5 times as much copper as a petrol -guzzler, estimates S&P Global.
Now there are other prints. Artificial intelligence has created a new copper consumer with their dependence on data centers and thirst after power. Growing defense budgets lead to further pressure. But while mining becomes a question of urgency, new decades and billions can take. The resolution, a website of Rio Tinto and BHP, could be the largest copper mine in the United States, but has been observed in legal disputes for years.
Theoretically, tariffs could stimulate a new production by increasing the price. Blackrock estimated that 12,000 US dollars per ton are the price for which the trench looks financially sustainable, and after Trump had said that he would “make copper”, this is roughly the place where the US price is located. But trade taxes are a blunt tool. And they have a fatal mistake: miners plan their investment for decades, while tariffs can disappear with the blow of a abbey.
In addition, it is only the first problem to get copper out of the ground. The second makes it usable. The United States hardly any copper nowadays, as it is usually an expensive, dirty and unpopular process. This activity has shifted in wholesale in China, which, according to the US Geological Survey, twists almost half of the world care compared to 3 percent in the United States. Some American melting huts were implemented as data centers.
This does not mean that “copper” is futile. Subsidies have their place. And while miners need certainty for years to break the ground, technologists are not such stickers. Companies such as Freeport-McMoran and BHP-supported start-up Cebo tinker new opportunities to extract and refine more copper from existing mines. Higher prices can give you a wealth. Customs are a bad way to solve the problem of presentation, but a decent way to concentrate the mind.
