On Tuesday (February 25th), US President Trump ordered a national security investigation into US copper imports, aimed at rebuilding domestic copper production and reducing dependence on imports. This move may trigger a new round of tariffs, becoming the latest move by the Trump administration to challenge global trade rules. Copper, as the core material for electric vehicles, military equipment, power grids, and consumer goods, the adjustment of its supply chain will have a profound impact on the global economy and trade pattern.

Gold prices rose sharply in the Asian market on Wednesday (February 26), rebounding from the previous trading day's one week low. Spot gold rose 0.52% to the 2930 mark at one point, as uncertainty brought about by US President Trump's tariff plan suppressed risk appetite and boosted demand for safe haven gold.

Background and Motivation of Investigation

The Trump administration believes that Asian powers are attempting to dominate the global copper market, posing a threat to the national security and economic interests of the United States. To this end, Trump signed an executive order directing Commerce Secretary Lutnik to initiate an investigation under Section 232 of the Trade Expansion Act. This law was used during Trump's first term to impose a 25% tariff on global steel and aluminum. The investigation results may lead to the imposition of new tariffs on copper imports, and Trump is more inclined towards tariffs rather than quotas.

The strategic importance of copper

Copper is the core raw material for electric vehicles, military hardware, power grid infrastructure, and various consumer goods. The statement released by the White House indicates that 45% of copper consumption in the United States relies on imports, a significant increase from the 1990s. With the rapid development of solar technology, global electrification, and artificial intelligence applications, the United States may face copper shortages in the future. The Ministry of Energy has listed copper as a key material for the medium term and emphasized its importance to national security.

Global trade impact

The scope of the investigation covers raw copper, copper concentrate, copper alloys, scrap copper, and copper derived products. Although China is seen as a major competitor, the countries most affected by the new tariffs may be Chile, Canada, and Mexico, which are the main suppliers of refined copper and copper products to the United States. This move may trigger a backlash from trading partners and exacerbate global trade tensions.

Domestic economic and political considerations

The Trump administration claims that unfair trade practices have led to a decline in the US copper industry and job losses. Commerce Secretary Lutnik stated at the signing ceremony that "copper should return to the United States" and vowed to protect domestic industries. However, Trump's trade policy also faces challenges. Despite his promise to reduce the cost of living, consumer confidence has sharply declined due to rising inflation expectations, and the US stock market has continued to decline due to trade policy uncertainty.

Extension actions in the field of technology

In addition to copper, the Trump administration also plans to take action against digital service taxes imposed by various countries on American technology companies such as Google, Apple, and Amazon. Trump has ordered the resumption of relevant tariff investigations, demonstrating the comprehensiveness and aggressiveness of his trade policy.

Summary:

Trump ordered an investigation into copper imports not only to protect domestic industries and employment, but also to ensure America's strategic autonomy in critical resource areas. This measure may trigger a new round of global trade frictions, especially affecting major copper suppliers. However, its success will depend on whether the United States can find a balance between protectionist policies and global economic cooperation. As the investigation progresses, the future pattern of the copper industry and changes in global trade rules will become the focus of attention.

The Trump administration's investigation into copper imports and potential imposition of new tariffs could further escalate global trade tensions. The intensification of trade frictions usually boosts market risk aversion, driving investors to turn to safe haven assets such as gold, thereby providing support for gold prices. However, the long-term impact will depend on the effectiveness of policy implementation and changes in the global economic landscape. Investors need to closely monitor the progress of trade policies and their impact on market sentiment.