Price increases before tariffs arrive! Is there another secret behind the expansion of U.S. manufacturing?

U.S. President Trump signed an executive order this week to launch a Section 232 investigation into copper, which may lead to the imposition of copper import tariffs. Affected by this, COMEX copper on the New York Mercantile Exchange once jumped nearly 5%. Analysts say premium costs are expected to rise further during the long process of resuming domestic copper mining and refining. It is worth mentioning that with the imminent implementation of steel and aluminum tariffs, domestic steel prices in the United States have risen significantly, and the release of costs for downstream manufacturers may become a hidden concern behind the return of manufacturing expansion.

According to reports, U.S. President Trump signed an executive order on Tuesday directing U.S. Commerce Secretary Lutnick to launch a new national security investigation into copper imports in accordance with Section 232 of the Trade Expansion Act of 1962. A White House official said a decision on whether to impose tariffs and at what rate would be based on the findings, adding that Trump preferred tariffs to quotas.

According to the U.S. Geological Survey, nearly half of U.S. copper demand depends on imports. Domestic copper output has fallen 11% since 2021 as miners struggle to expand existing mines and develop new projects. There are currently only two copper smelters operating in the United States. Asarco, controlled by industrial group Grupo Mexico, said in May last year that it planned to restart its mothballed copper smelter in the United States. Ole Hansen, head of commodity strategy at Saxo Bank, said: “The United States has no chance to increase its production and smelting capabilities in the short term.

Affected by this, the premium of COMEX copper on the New York Mercantile Exchange relative to the benchmark international copper on the London Metal Exchange soared to US$816 from US$580 the previous day, but it is still lower than the historical peak of US$1,153 set on February 13.

Citigroup reported on Wednesday that its current base forecast is that the United States will impose a 25% tariff on copper in the fourth quarter of 2025. Before the copper tariffs are confirmed, the forward premium of the 1-year copper contract in the United States and Europe will move toward a price that reflects an effective tax rate of 15%-20%.

Because copper is widely used in power, construction and electric vehicles, continued price increases could dampen industrial activity, curb consumption and force companies to switch to other materials. Morgan Stanley analyst Amy Gower said in a report: “Building a new smelter will take more than two years. New copper mines will take even longer, and many copper mines will face licensing challenges.

Raw material costs may push up price pressure. Earlier this month, Trump announced that a 25% tariff on steel and aluminum is scheduled to begin on March 12, which has already had repercussions among manufacturers and builders who rely on these metals to manufacture goods.

Data released by S&P Global show that the initial value of the U.S. manufacturing PMI in February was 51.6, a new high since June 2024 and returning to the expansion range. Notably, the price paid by businesses for inputs rose to 58.5 from 57.4 in January. “Procurement managers overwhelmingly blame tariffs and related supplier-driven price increases.

A recent global corporate survey released by Bain & Company found that 40% of chief operating officers and other executives expect their input costs to increase by double digits due to tariffs, while about 80% of respondents are revising or considering revising financial forecasts to take into account the increased costs, 45% of which are from the United States.

Hot-rolled coil prices in the U.S. Midwest have risen 12% in the past two weeks to $839 a ton, according to data provider Fastmarkets, and are up 20% since Trump took office on January 20. In contrast, Nordic HRC prices rose by just 6% over the same period. Nucor CEO Leon Topalian praised Trump’s tariff plan earlier this month, calling it the first step in an “America First trade agenda,” and the company last week raised its hot-rolled coil prices for the fourth time since the start of the year.