"50% Copper Tariff" Shock Raises Fears of Product Price Hikes in Power Equipment Industry

Smelting Industry Reviewing Response Strategies
Wire and Secondary Battery Sectors Closely Monitoring
"Monitoring the Situation Even Without Direct Exports"

Tension is mounting across related industries after U.S. President Donald Trump announced plans to impose a 50% tariff on copper. Copper is a key raw material widely used in major industries, including copper foil for secondary batteries, power cables, and transformer coils. As concerns grow that companies ranging from secondary battery material manufacturers to power equipment and wire producers could be affected, the industry has begun analyzing the potential impact on supply chains.

According to industry sources on July 9, LS MnM, the largest copper smelting company in South Korea, is closely monitoring the situation as it has customers who process its products and export them to the United States. Although the company does not directly export to the U.S., it is reviewing response strategies, given that future tariffs could affect exports of intermediate goods. A company representative said, "We are keeping a close watch on trends related to our customers' exports to the United States."

The industry most closely watching the copper tariff is power equipment manufacturers. Domestic companies in this sector are experiencing an unprecedented boom, with ultra-high-voltage transformers in such high demand that they cannot keep up with orders. However, copper tariffs could negatively impact their exports. Depending on the type, each transformer contains between 5 and 10 tons of copper. If tariffs continue to drive up product prices, final demand for transformers could decrease, and companies without a production base in the United States may lose price competitiveness. A representative from a power company said, "Starting with copper, other auxiliary materials could also be affected," and added, "In the mid- to long-term, there is a possibility that the situation could become unfavorable."

Even companies with production bases in the United States are on edge. Hyosung Heavy Industries produces most of its main products at its local plant in Memphis. The company explained that it is monitoring related developments, as a prolonged protectionist stance could affect the entire supply chain. A company representative stated, "We are keeping an eye on supply chain risks."

Wire manufacturers are also closely watching the impact of copper tariffs. However, in the short term, they say they can pass on some of the increased costs to customers thanks to the 'Escalation Clause,' which allows fluctuations in raw material prices to be reflected in contract amounts. A representative from the wire industry explained, "The impact of copper price fluctuations is limited due to clauses in export and import contracts that automatically adjust contract prices based on changes in raw material costs."

Secondary battery companies are also keeping a close watch on the situation, as copper foil?a core material?is used in secondary batteries. South Korea is the world's second-largest producer of copper foil after China. Major companies, including SK Nexilis, are deeply involved in the U.S. electric vehicle battery supply chain. A company representative said, "There have been no notable developments on the customer side so far, and we do not expect any significant impact in terms of competitiveness."