🚨 Trump's 50% Copper Tariff
Today Korean Economic News for Beginners | 2025.08.07
0️⃣ Korean Copper Foil Industry Hit Hard, EV Battery Supply Chain Shaken
📌 50% Tariff on Copper Semi-Products Hurts Copper Foil Exports, EV Cost Increase Unavoidable
💬 Former President Trump announced that he would impose a 50% tariff on imported copper semi-finished products under Section 232 of the Trade Expansion Act. This will directly hit Korean companies that export copper foil, a key material for EV batteries, to the United States. Copper foil is a thin copper film used in battery anodes and accounts for about 10% of EV battery costs. If a 50% tariff is imposed, the selling price of Korean copper foil in the US will rise significantly, weakening competitiveness. However, some analysts say this could also be an opportunity for Korean companies with superior technology, as Chinese copper foil already faces high tariffs and regulations that make it difficult to enter the US market.
1️⃣ Easy to Understand
The US decided to put high taxes on copper foil, an essential material for EV batteries, which will cause big problems for Korean companies. But it might also create opportunities, so we need to watch the situation carefully.
Let me first explain what copper foil is. Copper foil is a very thin sheet made of copper. It's as thin as paper but conducts electricity very well, making it an essential material for making EV batteries. Think of it as the pathway for electricity to flow inside batteries.
Then former President Trump announced that he would "impose a 50% tax on copper products coming into America." This is supposed to protect the copper industry in the US. 50% is a really high tax. For example, if 1kg of copper foil cost $10, it would now cost $15 including the tax.
This makes it much harder for Korean copper foil companies to sell their products in America. Since the price becomes more expensive, American companies will try to buy products from other countries instead of Korean copper foil.
But it could also become an opportunity. Copper foil made in China already faces various regulations from the US, making it hard to enter the American market. However, Korea has excellent technology and can make high-quality copper foil. So we might be able to take more market share while Chinese competitors are absent.
But there are also concerns. If copper foil prices go up, it will burden companies that make batteries, and eventually EV prices could also rise. If electric cars become more expensive, people will buy fewer of them, which could reduce demand for copper foil.
In the end, this tariff measure has two sides for our copper foil industry - it's both a crisis and an opportunity.
2️⃣ Economic Terms
📕 Copper Foil
Copper foil is an extremely thin sheet made of copper and is a key material for EV batteries.
- It sits under the battery's anode material and serves as a pathway for electric current to flow.
- It's usually 8-35 micrometers (㎛) thick, about one-third the thickness of a human hair.
- It accounts for about 10% of the total cost of EV batteries, making it an important component.
📕 Section 232 of the Trade Expansion Act
Section 232 of the Trade Expansion Act is a US law that allows tariffs on specific items for national security reasons.
- If imported goods are deemed a threat to US national security, tariffs or quotas can be imposed.
- This provision was also used to impose steel and aluminum tariffs during the Trump administration.
- It's considered a comprehensive and powerful trade regulation tool.
📕 Tariff Pass-Through
Tariff pass-through is when the cost burden from tariffs gets passed down the supply chain to final consumers.
- Costs move from importers → manufacturers → finished goods companies → consumers.
- A 50% tariff can significantly affect final product prices.
- Ultimately, consumers end up paying higher prices.
📕 Supply Chain Localization
Supply chain localization is a strategy of producing directly in local markets to avoid tariff burdens.
- Building factories in the US and producing locally can avoid import tariffs.
- Initial investment costs are high, but it enables stable supply in the long term.
- This is why many Korean companies are reconsidering US investments.
3️⃣ Economic Principles and Outlook
✅ Revival of Protectionism and Global Supply Chain Restructuring
Let's analyze how Trump's copper tariff policy affects the global trade environment.
First, as US protectionism becomes full-scale, global supply chains are being restructured. Former President Trump is actively protecting domestic industries under "America First" policies. He intends to strengthen the US manufacturing base by imposing tariffs on basic materials including copper, steel, and aluminum. This is expected to bring major changes to the existing free trade order. Especially as trade conflicts with China intensify, third countries like Korea, Japan, and Europe must also seek new strategies.
Second, the Korean copper foil industry faces both crisis and opportunity. While a 50% tariff is certainly burdensome, it's also an opportunity for Korean companies to expand market share when Chinese copper foil is already excluded from the US market. Korean major copper foil companies like SK Nexilis and Iljin Materials have world-class technology and maintain advantages in quality competition. Korea has unparalleled technology in high-value products like ultra-thin copper foil and high-elongation copper foil.
Third, pressure for supply chain localization is expected to accelerate. To avoid tariff burdens, Korean companies are also actively considering building production bases in the US. SK Nexilis has already decided to expand US investment, and other companies are exploring local production plans. However, there are many challenges to solve, including large initial investment costs, the burden of technology transfer, and difficulties securing skilled workers. Securing copper raw material supply chains within the US will also be an important variable.
While the spread of protectionism brings short-term confusion, it can create new opportunities for Korean companies with superior technology in the long term.
✅ Impact on the EV Battery Industry
Let's look at how rising copper foil prices will affect the entire EV battery industry.
First, rising battery manufacturing costs could weaken EV price competitiveness. Copper foil accounts for about 10% of battery costs, and if a 50% tariff is imposed, total battery costs are expected to rise by about 5%. This directly affects EV finished product prices. With the price gap between EVs and internal combustion engine cars still large, additional cost increases could become obstacles to EV adoption. The impact is expected to be greater in the price-sensitive mid-to-low-end EV market.
Second, battery manufacturers' efforts to diversify suppliers will accelerate. Korean battery companies like LG Energy Solution and Samsung SDI, which work with US automakers like Tesla, GM, and Ford, are moving to diversify their copper foil sourcing. If Korean copper foil loses price competitiveness, they're likely to consider Japanese or Taiwanese companies as alternatives. However, since copper foil is a core material directly related to battery performance, decisions can't be made based on price alone.
Third, battery technology innovation will become even more important. As raw material cost pressures increase, battery companies are expected to focus more on developing technologies that reduce material usage. The development of thinner copper foil, new materials that can replace copper foil, and battery structure innovations are likely to accelerate. Battery recycling technology will also become more important, with active recycling of rare metals like copper.
Copper foil tariffs will change the cost structure of the entire EV industry, making technology innovation and supply chain restructuring essential responses.
✅ Korean Companies' Response Strategies and Outlook
Let's analyze survival strategies for the Korean copper foil industry in response to tariff imposition.
First, transitioning to high-value products is a key response strategy. While price competition is fierce in general copper foil, Korea has unparalleled competitiveness in high-tech products like ultra-thin copper foil and special alloy copper foil. Especially ultra-thin copper foil for next-generation batteries (6㎛ or less) has high technology barriers that only a few companies can produce. SK Nexilis has already succeeded in mass-producing 4.5㎛ ultra-thin copper foil and is accelerating development of even thinner products. These differentiated product lines are expected to maintain sufficient competitiveness even with a 50% tariff.
Second, building US local production bases to avoid tariffs is essential. SK Nexilis is already considering building copper foil production lines in Georgia, and Iljin Materials is also exploring North American expansion plans. While local production has high initial investment burdens, it enables stable market access in the long term. It can also receive favorable conditions in the US government's EV subsidy policy (IRA) based on higher local production ratios, creating a win-win effect. However, securing copper raw materials and training skilled workers in the US remain challenges.
Third, expanding Chinese market penetration and developing new markets is necessary. A strategy to offset difficulties in the US market by expanding Chinese and European markets is also important. China is the world's largest EV market and battery production is rapidly increasing, causing explosive growth in copper foil demand. New opportunities are also opening in emerging markets like India and Southeast Asia as EV adoption spreads. Korean companies need to expand their presence in various markets based on their excellent technology.
While short-term difficulties are expected, crisis can be turned into opportunity through differentiation based on technology and market diversification.
4️⃣ Conclusion
Trump's 50% copper tariff measure is a major challenge for the Korean copper foil industry, but it's also an opportunity to prove Korean companies' technology in the global market. Whether crisis can be turned into opportunity depends on our companies' response strategies.
The biggest problem is that the high 50% tariff significantly reduces the price competitiveness of Korean copper foil. This will inevitably lead to declining market share and reduced sales in the US market. Rising copper foil prices could also burden the entire EV industry by increasing battery costs.
However, there are also opportunities. With Chinese copper foil already excluded from the US market, conditions are set for Korea to capture the market based on technology. Korea's unparalleled technology in high-value products like ultra-thin copper foil will be a major weapon.
Several strategies are needed for successful response. First, portfolio transition to high-value products must be accelerated. Second, tariff burdens must be fundamentally resolved through building US local production bases. Third, export diversification to other markets like China and Europe must be actively pursued.
Government-level support is also needed. This includes expanding financial support for companies' overseas investments, efforts to reduce tariffs through trade negotiations, and strengthening technological competitiveness through R&D support.
Most importantly, this crisis should be used as an opportunity for the Korean copper foil industry to make another leap forward. The industry must improve its constitution from simple price competition to competing with technology, and work to occupy more important positions in global supply chains.
In the end, this tariff measure will be a touchstone testing the real competitiveness of the Korean copper foil industry. It will be interesting to see how Korean companies armed with technology and quality overcome this challenge.
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