The copper crunch: inside the US-China battle for a critical global supply chain

As China and the United States compete for leadership in AI, energy and other strategic sectors, a quieter but no less important contest is taking place further down the supply chain: the race to secure copper. The humble metal has become one of the most vital commodities of the 21st century, powering the servers, systems and cooling infrastructure that support artificial intelligence as well as the batteries used in electric vehicles and the electronics guiding modern weapons. That growing importance risks fuelling geopolitical tensions. US Commerce Secretary Howard Lutnick is expected to deliver an updated assessment of the market to the White House by June 30, after US President Donald Trump signed an executive order last year to revive America’s domestic industry. The report will include an update on the necessity of new tariffs on refined copper imports, following a recommendation by Lutnick in a similar report last year. At that time, the commerce secretary suggested duties of 15 per cent to be enacted on the first day of 2027, rising to 30 per cent a year later. If approved, these tariffs would be imposed on an existing 50 per cent tariff on semi-finished copper products and intensive derivative items, levied in August with other measures designed to encourage domestic production and investment. But Washington faces a serious challenge: its growing focus on supply chain security is colliding with a highly concentrated global industry. “A single foreign producer dominates global copper smelting and refining, controlling over 50 per cent of global smelting capacity and holding four of the top five largest refining facilities,” the White House wrote in a February 2025 order, which opened an investigation into copper imports under Section 232 of the 1962 Trade Expansion Act. The statement was repeated in subsequent orders. While it never identified the country, only one producer would qualify: China. “Trump’s administration is concerned about China’s dominance in copper refining and smelting; therefore, the tariff aims to reduce imports of refined copper and copper-intensive products but not copper input materials to boost its domestic production capacity,” said Liang Yan, a professor of economics at Willamette University in the US. While China supplied about 20 per cent of US copper imports in 2025, it controlled more than 52 per cent of global refining and smelting capacity and, since 2000, had accounted for about three-quarters of global smelter capacity growth, she said. This raised the prospect of US vulnerability should Beijing ever choose to weaponise the supply chain, Liang stated – a concern that marks a dramatic reversal of fortunes for a country that once dominated the global industry. Dominance and decline A century ago, the mines of Michigan, Arizona and Utah helped fuel industrial growth, electrification and wartime manufacturing in the US while American copper smelters and refineries ranked among the world’s most advanced. Much of that advantage no longer exists. As processing capacity shifted overseas, the number of operational copper smelters in the US fell from 16 to only two, Liang said. By contrast, China has spent two decades gaining a stronger foothold in the global supply chain. Once heavily dependent on imported concentrates, it invested aggressively in resource-rich countries while steadily expanding its domestic smelting and refining capacity, becoming the world’s largest producer of refined copper. Beijing has also assembled a global network of mines, processing facilities and supply routes through overseas investment, state-backed financing and the global expansion of Chinese mining companies. In Peru, Chinese firms have secured stakes in major copper mines, including Las Bambas, one of the world’s largest. In the Democratic Republic of Congo, they have become major players in crucial projects such as Kamoa-Kakula. After acquiring the La Arena copper and gold mine in Peru, China’s Zijin Mining Group also announced plans in April to invest about US$1.5 billion to expand the facility and boost production. Current US policies give the impression of being reactive rather than proactive, typically driven by short-term trade disputes rather than a long-term vision Luke Balleny, WRI Polsky Energy Centre According to a June report by Poland-based metals operator AC Steel, China, together with the DR Congo, contributed about 60 per cent of global refined copper output and grew a combined 9 per cent in the first quarter of 2026, while the rest of the world contracted 1.4 per cent. That supply-side dominance is underpinned by equally strong domestic demand, as the metal’s importance extends across almost every corner of the Chinese economy. Power infrastructure accounted for 44 per cent of end-use copper consumption, according to a June estimate by China Securities, followed by transport at 15 per cent and home appliances at 13 per cent. Machinery, electronics and construction made up much of the remainder. Divergent strategies To counter China’s dominance, the Trump administration seeks to combine industrial policy with protectionist measures to reduce dependence on external sources and encourage domestic investment. But as Washington races to secure a metal critical to modern technology, the prospect of new tariffs has already sent ripples through global markets. In a report published earlier this month, Goldman Sachs said copper prices could rise to above US$14,000 per tonne in the second half of 2026 if Washington’s proposed tariffs took effect, triggering another wave of stockpiling by US buyers. The bank also raised its average copper price forecast for 2027 by about 13.5 per cent to US$13,800 per tonne, citing a tightening market outside the US as weaker mine supply and stronger American imports drained the metal from other regions. Spot copper on the London Metal Exchange currently trades at about US$13,650 per tonne. “The Trump administration plans to have constant policy fine-tuning to include new products in the tariff scheme, but the continuous shifting of the tariff boundaries creates corporate uncertainty, which hinders long-term investment,” said Liang of Willamette University. “Whether or not tariffs can be effective really depends on whether they are only part of a broader industrial policy. Tariffs could provide some breathing room for a limited period of time, but they do not automatically expand domestic production.” US policymakers appear to be aware of this dilemma, as incentives for domestic copper production have been stepped up. This year alone, major projects including Resolution Copper in Arizona, Copper World and White Pine North secured regulatory approvals, financing commitments or strategic investments. But lengthy permitting timelines remained a major constraint, Liang noted. According to US congressional data, domestic mining and smelting projects took an average of 19.1 years to reach production, compared with a global average of 16.2 years for copper mines, according to S&P Global Market Intelligence. By contrast, China has treated copper as a critical resource for a decade. Beijing formally designated the metal a strategic commodity in its national mineral resources plan in 2016, while the US did not add copper to its list until 2025, making it eligible for federal funding, research support and streamlined permitting. “Current US policies give the impression of being reactive rather than proactive, typically driven by short-term trade disputes rather than a long-term vision for copper’s role in the energy transition,” said Luke Balleny, manager for energy minerals and circularity at the WRI Polsky Energy Centre. “This means that with no clear road map, companies are hesitating to invest in new smelters, recycling facilities or long-term exploration,” he argued in a report last year. “Perhaps the most fundamental problem is the absence of a coherent US copper strategy. Unlike China, which coordinates mining, refining, recycling and trade under a unified framework, the US remains fragmented.” To ease domestic bottlenecks, Washington is increasingly turning to critical mineral partnerships and investment initiatives in countries such as Zambia and the DR Congo, as it seeks to reduce its dependence on Chinese-controlled processing capacity. But just as Trump wants to make the industry “great again”, the global market is entering a period of scarcity. Unlike rare earth supply chains, copper supply chains are spread across different jurisdictions Rogan Quinn, Rhodium Group The new rare earths? Production disruptions at Indonesia’s Grasberg mine, the world’s second-largest copper mine, and setbacks at the DR Congo’s Kamoa-Kakula project – a major source of global copper supply growth – have clouded the outlook for a recovery in output. Together, the delays have prompted Goldman Sachs to push back its forecast for a full rebound to 2028. In June, the bank cut its 2026 global mine supply forecast by about 350,000 tonnes, equivalent to about 1.5 per cent of worldwide copper supply. At the same time, demand is being reshaped by a growing number of AI data centres, which require internal power distribution and cooling systems. S&P Global estimated this year that copper demand from data centres alone would rise from 1.1 million tonnes in 2025 to 2.5 million tonnes by 2040. Tightening supply and rising demand have sharpened concerns in Washington over the centrality of critical mineral inputs to industrial strategy and geopolitical competition. Such fears have intensified since April 2025, when Beijing imposed export restrictions on rare earths following Trump’s “Liberation Day” tariffs. But it remains uncertain whether China’s dominance in copper refining can translate into the same strategic leverage. Rogan Quinn, a senior research analyst with Rhodium Group’s China practice, said the structure of the global copper market would make any such strategy far more difficult to replicate. “Unlike rare earth supply chains, copper supply chains are spread across different jurisdictions,” Quinn said, adding that refined copper was a globally traded commodity with a broad supplier base and that it would generally flow to the market offering the highest price. “In the past 12 months, the Comex premium showed that if you pay, copper will come – refineries diverted copper flows away from China to the US. “Those copper costs are embedded in downstream product prices. In many ways, US policy choices are a greater threat to copper-intensive industries downstream than Chinese refining capacity.” Quinn said the US was expected to remain a net importer of refined copper for at least the next five to 10 years, meaning domestic industries would remain exposed to higher costs if new trade barriers were introduced. “If the US imposes a tariff on refined copper imports, it will essentially be a direct tax on data centres, renewables, the grid and other copper-intensive industries,” he added. This potential exposure to higher costs could be reinforced by the lengthy timelines needed to develop new production capacity. “There will be a lag time that may pose a short to medium-term potential challenge to the US’ economic and technological ambitions,” said Balleny of the World Resources Institute. Whether the US could successfully rebuild domestic capacity would ultimately depend on how much support Washington was willing to provide, he stated, as private capital alone was unlikely to deliver the scale of investment required. “The high cost of energy and labour in the US, strict environmental regulations and historically low copper smelter margins mean that government support will be critical to any rebuild of domestic copper smelting capacity,” he said in an interview. “An overarching challenge for the US will be how to produce more copper, more quickly, while doing so in a responsible manner.” The copper race underscores a broader shift in global power, where industrial policy is reasserting itself as a central feature of economic competition. As Beijing and Washington intensify their rivalry over strategic industries, the International Energy Agency warned in a March report that the global copper market could face a supply deficit of 30 per cent by 2035 – underscoring the supply chain constraints in an increasingly fragmented international economy.

The copper crunch: inside the US-China battle for a critical global supply chain

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Washington’s efforts to rebuild the domestic copper industry are colliding with Chinese dominance in a metal central to advanced tech and defence systems

Washington’s efforts to rebuild the domestic copper industry are colliding with Chinese dominance in a metal central to advanced tech and defence systems