Copper prices extended their losses on Tuesday after President Donald Trump threatened to impose new tariffs on U.S. imports of copper, aluminium, and steel, raising concerns over potential ripple effects on the manufacturing sector and consumers. In a speech to Republican lawmakers on Monday, Trump reiterated his intention to impose tariffs on these key metals to revitalize domestic production, particularly for military hardware.

"We have to bring production back to our country," Trump declared, signalling his continued push to strengthen U.S. manufacturing. However, analysts and industry leaders are raising alarms about the unintended consequences of such a move. While the tariffs are intended to reduce reliance on foreign metals, experts warn they could drive up costs for U.S. consumers due to a shortfall in domestic production capacity and the lengthy timeline required to re-establish smelting and refining operations.

The potential tariffs have left the market in a state of uncertainty, with mining executives already preparing for a range of possible outcomes. While the exact scope of the tariffs remains unclear, that trade flows and industry dynamics could be dramatically affected. Daniel Morgan, an analyst at Barrenjoey Investment Bank in Sydney, explained, "There are still many unknowns—how widespread these tariffs will be, how long they will last, and who will bear the financial burden. Ultimately, it will likely be consumers who pay, especially in sectors where there’s no immediate domestic substitute."

In the U.S., several aluminium and copper smelters have closed or scaled back operations, and experts suggest that even if tariffs are enacted, it would take years to fully rebuild the infrastructure necessary to meet demand. U.S. manufacturers would face increased costs in the short term, as domestic production ramps up more slowly than anticipated.

In Canada, major aluminium producers like Rio Tinto and Alcoa could see little immediate impact on revenue, but costs are likely to be passed along to downstream industries like automotive manufacturing. Alcoa’s CEO William Oplinger recently warned that a 25% tariff on Canadian aluminium exports to the U.S. could lead to an additional $1.5 billion to $2 billion in annual costs for American consumers.

Copper markets are similarly vulnerable to tariff-induced disruptions. The U.S. is a net importer of copper, and any increase in tariffs could escalate the price of copper, placing further strain on manufacturers who rely on imports. While the tariffs may accelerate the development of new domestic mining projects like Rio Tinto’s Resolution mine in Arizona, these projects are still years away from production, meaning U.S. industries would face higher costs in the interim.

Kathleen Quirk, CEO of Freeport-McMoRan, expressed concerns about the broader inflationary impact that copper tariffs could have on industries beyond the mining sector. While Freeport’s copper sales to the U.S. may be insulated from the direct effects of tariffs, the company’s CEO highlighted the risk of escalating prices across the supply chain.

International reactions also hint at global consequences. In Japan, a major steel exporter, economists note that Japan’s focus on high-value specialty products could shield it from some of the direct effects of new tariffs. Still, the overall impact on international trade and U.S. manufacturers remains uncertain.

As discussions around Trump’s tariff threats unfold, the broader implications for U.S. manufacturing, trade flows, and consumer prices are becoming increasingly clear.