Trump tariffs on cars, copper, aluminum could hit hard Clutch Fire

As President Donald Trump’s tariffs against more than a dozen countries spark fresh concerns about looming country-specific trade measures, often overlooked are the levies on specific products and commodities that are already in place or could soon be coming.

These so-called Section 232 tariffs — already announced on cars, steel and aluminum, and floated for copper and other items — further constrain businesses and U.S. trading partners trying to navigate a constantly evolving trade environment.

Trump said Tuesday that he would impose 50% tariffs on copper imports, double what he had previously floated for the valuable commodity. He also said he would soon announce tariffs “at a very high rate” on pharmaceuticals.

Trump’s announcement sent copper prices soaring, and the metal posted its highest single-day gain since 1989. The copper futures contract for September closed Tuesday up 13%, at $5.6855 per pound.

The threats were the latest sign of the president’s willingness to use sector-specific tariffs to gain leverage over trading partners and try to reshape the U.S. economy.

The announcement came a day after Trump rolled out stiff tariff rates on imports from 14 countries via letters, all effective Aug. 1: Japan, South Korea, Malaysia, Kazakhstan, South Africa, Laos, Myanmar, Bosnia and Herzegovina, Tunisia, Indonesia, Bangladesh, Serbia, Cambodia and Thailand.

The letters are intended to ratchet up the pressure on U.S. trade partners to come to the table before the Aug. 1 deadline.

But as countries’ negotiations are still in limbo — and some nations are still pushing for carve-outs, with varying degrees of receptiveness from the White House — sector-specific tariff rates are already squeezing trading partners and U.S. consumers.

South Africa and Kazakhstan, two countries that Trump hit with tariff rates on Monday, are both major producers of aluminum, while Japan and South Korea, also on the list, are both major steel producers.

“Reciprocal tariffs are making headlines, but the product-specific tariffs will still have a significant impact on the domestic market,” Mike Lowell, a partner at law firm Reed Smith, told CNBC.

Last month, Trump announced that he was doubling tariffs on steel and aluminum imports to 50% for most countries, effective the following day.

Steel and aluminum are essential materials for durable goods like refrigerators and cars. But they are also the chief components of smaller items Americans use every day, like zippers and kitchenware.

The steel and aluminum tariffs are a continuation of Trump’s first-term trade agenda, when he implemented a 25% tariff on steel and 10% tariff on aluminum imports in 2018, causing near-immediate price spikes, Reuters reports.

But they are also different from his first-term tariffs in important ways. Firstly, the rates are much higher — in some cases double their previous levels. Secondly, the tariff rates today are being layered on top of other customs duties.

“The use of section 232 together with other instruments is adding further complexity to the tariff landscape and elevates the importance of country negotiations to get exemption,” Iacob Koch-Weser, an associate director of global trade and investment at BCG, wrote last month.

Trump has repeatedly cited Section 232 of the massive 1962 Trade Expansion Act to justify his sector-specific tariffs. That measure permits the president to unilaterally adjust tariff rates when America’s national security is under threat.

A different law, Section 301, is being used to impose tariffs on specific products from China. Some of these were imposed during Trump’s first term, and remained largely in place during the tenure of his successor, President Joe Biden.

Another sector that has been hit hard with specific tariffs is cars and auto parts. That 25% rate disproportionally impacts Japan and South Korea, two leading automotive exporters to the United States.

The White House is still considering whether to grant exemptions on the auto tariffs to some companies, partly in response to intense lobbying by industry groups, CNBC reported.

The White House in April did sign an executive order preventing the auto tariffs from being stacked with other levies, such as on aluminum and steel, bringing some relief to the auto industry.

But given that supply chains often have delayed reactions to tariffs, Trump’s levy on auto parts may not be fully felt for years.

Experts have also noted that Trump’s legal authority to set and adjust tariffs is more firmly established when it comes to sector-specific imports than it is for his country-specific “reciprocal” rates.

“Section 232 tariffs are central to President Trump’s tariff strategy,” said Lowell, of Reed Smith.

“They aren’t the target of the pending litigation, and they’re more likely to survive a legal challenge and continue into the next presidential administration, which is what we saw with the aluminum and steel tariffs originally imposed under the first Trump administration,” he added.

To justify imposing country-by-country tariffs earlier this year, Trump invoked emergency powers that are currently being challenged in federal court. If the president loses that case, he may decide to fall back on sector tariffs as a different way of leveraging U.S. economic power.

Trump has also already floated the possibility of imposing additional sector-specific tariffs on agricultural products, iPhones, trucks and other items, though no action has been reported yet.

Trump had previously ordered the Commerce Department to institute a Section 232 national security investigation into both copper and lumber imports, with results due in November.

But his Tuesday comments suggest that the steep levies could be coming much sooner.

“Today, we’re doing copper,” Trump said of the commodity that makes up most of the electrical wiring in American homes.