Copper tariffs are seen as another potential headwind for the automobile sector
Jul. 14, 2025 7:37 AM ET
By: Clark Schultz, SA News Editor
Wells Fargo dove into the implications for the auto sector of the Trump Administration imposing a 50% tariff on copper imports from select countries, with the stated goal of protecting domestic industries and addressing trade imbalances.
Additional tariffs on auto imports and auto parts, particularly from Japan, South Korea, and other major trading partners, are set at 25% and may take effect August 1 unless new trade agreements are reached.
Analyst Colin Langan highlighted that copper is essential for wiring, motors, and battery components. He noted that higher copper prices due to tariffs will directly increase manufacturing costs for automakers, especially those producing electric vehicles, which require more copper than internal combustion engine vehicles.
Langan said the erratic nature of tariff policy has introduced price volatility and uncertainty, causing automakers and suppliers to delay capital purchases and inventory restocking. While U.S. automakers may be able to pass some increased costs to consumers, foreign automakers could see a significant decline in demand due to higher prices, potentially losing market share in the U.S..
On a broader scale, higher vehicle prices could dampen consumer demand, especially as discretionary spending is already pressured by inflation and rising interest rates. In response to the copper tariff threat, automakers are expected over time to accelerate efforts to source copper and other materials domestically or from countries with favorable trade agreements to mitigate tariff impacts. In addition, companies may look to adjust product portfolios, delay launches, or shift production to lower-cost regions to offset higher input costs, updated Langan. |
