Trade

President Trump imposed a Section 232 tariff of 50% on semifinished copper and certain derivatives by presidential proclamation yesterday.

The reasoning: The proclamation cites Commerce Department findings that foreign competitors have used “state subsidies and overproduction” to outcompete domestic U.S. suppliers and that dependence on foreign sources has created “strategic vulnerabilities and jeopardizes the U.S. defense industrial base.”

What’s in scope: This proclamation does not list specific products, but a White House fact sheet describes the scope broadly as:

• Semifinished copper products like copper pipes, wires and sheets; and
• Copper-intensive derivative products like pipe fittings, cables and electrical components.

What’s not in scope: According to the White House fact sheet, copper input materials such as copper ores, concentrates, mattes, cathodes and anodes and copper scrap are not subject to 232 “or reciprocal tariffs.” Customs and Border Protection guidance will be critical to understanding this aspect of the proclamation.

Timing: The tariff goes into effect on Friday, Aug. 1.

Going forward: The proclamation directs the Commerce Secretary to establish a process within 90 days to consider adding derivative copper products to the scope of the tariff, similar to the process established for aluminum and steel.

• The Department of Commerce will also monitor imports of copper and derivatives going forward and will “from time to time” inform the president of further necessary action.

Domestic use: This proclamation invokes the Domestic Production Act to authorize the Commerce Secretary to require a certain percentage of U.S.-produced inputs be sold in the U.S. According to the fact sheet, this includes requirements that:

• 25% of high-quality copper scrap produced in the U.S. be sold in the U.S. to “improve access to this important feedstock for domestic fabricators and secondary refiners”; and
• 25% of copper input materials produced in the U.S. be sold in the U.S. by 2027, increasing to 30% in 2028 and 40% in 2029.

Brazil: Meanwhile, the president also released an executive order yesterday imposing an increased International Emergency Economic Powers Act tariff on imports from Brazil, citing concerns about violations of free expression rights and human rights in that country, as well as the “political persecution” of Brazil’s former president.

50%: The July 30 EO imposes an additional 40% tariff to be stacked with the 10% IEEPA “reciprocal” tariff issued on April 2, bringing the IEEPA tariff to 50%.

• This adjustment will go into effect seven days after the EO (not including the day itself).

Exemptions and adjustments: The EO includes a list of products not subject to this increase and also states that if a Section 232 tariff applies to the goods, the IEEPA tariff will not apply.

Going forward: As previewed in the president’s letter, the EO states that should Brazil retaliate, the U.S. tariff will be increased by the same amount.

• This EO directs the Secretary of State to monitor and recommend any additional actions under IEEPA.