Copper Stock FCX Glistening After Trump Launches National Security Probe into Imports
Copper stocks surged today after President Trump issued a warning about the national security risks posed by copper imports.
- Freeport McMoRan (FCX) rose nearly 5%, while Teck Resources (TECK) gained 3%, and Southern Copper (SCCO) saw a 2% increase.
- BHP Group (BHP), however, saw a slight decline.
U.S. Faces Copper Supply Chain Vulnerabilities
Trump’s Executive Order highlighted the “significant vulnerabilities” the U.S. faces in its copper supply chain. He emphasized the growing dependence on foreign sources for mined, smelted, and refined copper.
- Despite the U.S. having ample copper reserves, its smelting and refining capacity are far behind global competitors.
- According to ING Bank, the U.S. imports about 45% of the copper it uses, with Chile and Canada being the largest suppliers.
This is particularly critical due to copper’s use in key areas such as defense, infrastructure, and emerging technologies like clean energy, electric vehicles, and advanced electronics.
- Trump noted that a single foreign producer dominates over 50% of global copper smelting and holds the largest refining facilities, which poses a direct threat to U.S. national security.
Investigation into Copper Imports
In response, Trump directed the Department of Commerce, under Secretary Howard Lutnick, to investigate whether imports of copper, scrap copper, and copper derivatives could jeopardize national security.
- The investigation will explore whether these imports impair the U.S. economy and security.
Potential Solutions: Tariffs and Strategic Investments
Several potential solutions were suggested, including tariffs, export controls, or incentives to boost domestic copper production.
- Policies may also focus on strengthening the U.S. copper supply chain through strategic investments, permitting reforms, and enhanced recycling initiatives.
Trump previously launched a similar investigation into steel and aluminum imports in 2018, which led to tariffs being imposed.
Impact on the Copper Sector and Economy
Though copper futures rose following Trump’s Executive Order, some economists remain concerned about the broader economic impact.
- There are worries that tariffs could affect growth, demand, and jobs within the sector.
- Lutnick emphasized that it’s “time for copper to come home,” but increasing domestic production may require substantial investment.
The uncertainty around future policy changes under Trump’s administration could affect copper companies’ willingness to ramp up production in the U.S.