Trump's Copper Tariff May Skyrocket Car Costs

Former President Donald Trump has focused heavily on tariffs, implementing various taxes on different types of imported products, such as steel and aluminum, along with cars and car components. "Today we're tackling copper," the president stated during a Tuesday cabinet session.

Additionally, similar to previous tariffs, consumers might end up paying hundreds—perhaps even thousands—of dollars extra for new cars if he proceeds with this promise. This is due to the fact that the flexible metal is utilized in various components such as wiring systems, power seats, windows, mirrors, radios, alternators, and cooling fans. Meanwhile, today's battery-powered electric vehicles can have several miles of copper cable installed.

New Tariffs

Since taking office for his second term in January, Trump has introduced several different tariff measures, although he has temporarily halted some of them — most recently postponing "mutual" taxes until August 1. However, certain tariffs are currently active, including a 25% tax on imported vehicles and car components, as well as a 50% duty on aluminum and steel. AlixPartners recently projected that these levies will drive up the cost as much as $2,000 for the average car sold in the U.S. Domestic goods are also affected because they all use at least some foreign components and materials. This has started making consumers reconsider their purchasing decisions. what vehicle to buy - and whether to transition from new to pre-owned.

On Tuesday, Trump announced that he plans to take action shortly on additional targeted tariffs affecting various sectors, such as imposing a 200% tax on medicines. Meanwhile, copper will incur a 50% duty. This decision is expected to have wide-ranging effects throughout the economy since copper plays a vital role in almost every electrical and electronic product—ranging from fans and televisions to refrigerators, mobile phones, and, notably, vehicles.

Copper is Everywhere

Copper is widely present in today's world, with a significant portion being brought in from abroad—approximately $17 billion worth was imported last year, as reported by the U.S. Commerce Department. Although essential rare metals utilized in electronic devices—such as molybdenum, tellurium, indium, and tungsten—are primarily sourced from China, Chile remains the top provider of copper, exporting around $6 billion worth to the United States in 2024.

A typical car contains around two hundred pounds of copper," stated Sam Abuelsamid, senior analyst at Telemetry Research. "This includes wiring systems, connections, batteries, and alternators, as well as numerous motors throughout the vehicle.

That's even more true when it comes to electric vehicles. "To provide some context, a standard electric vehicle battery assembly alone may hold as much as 220 pounds of copper," states ElectraMet, a firm offering recycling and recovery "options" for metals and various substances.

Prices Skyrocket

"I'm amazed it took this long to implement the copper tariff," said Ed Mills, a Washington policy analyst at Raymond James, during an interview with CNN. He isn't the only one feeling this way. Copper prices have already risen by 38% on commodity exchanges this year, with the president's announcement on Tuesday leading to a 15% increase within the same day. At one moment, the price reached a new high of $5.66 per pound, then dropped slightly to $5.48, as reported by Commodity.com.

At that cost, a 50% tariff would amount to $2.74 per pound. This is only for the basic metal itself. There is already a significant increase in price when converting raw ore into useful metal, and subsequently into wires, connectors, and other essential components. The new tariff could raise the cost of an average car by several hundred dollars, and potentially over a thousand dollars for electric vehicles equipped with large battery systems, like the Chevrolet Silverado EV truck. With the recent congressional budget agreement removing existing tax incentives for EV purchasers, this might make these vehicles unaffordable for many prospective buyers.

However, prices are expected to rise even for cars powered by internal combustion engines, cautioned Abuelsamid, which have already been affected by some of Trump's additional taxes.