White House exempts many metals, minerals from fresh US tariffs

The US government exempted a slew of metals and minerals from its sweeping new tariffs in a move that some experts said was an attempt to bolster domestic manufacturing.

President Donald Trump announced reciprocal import taxes April 2 as the US tries to reshore manufacturing and address what the administration sees as unfair trade relationships. The executive order directly flagged exemptions such as copper and gold but listed the vast majority — including a swath of metals, ores and minerals — in an accompanying "Annex II" document.

Exemptions to the new duties include base metals like copper and zinc, rare earths, germanium, antimony, uranium ores and other types of the nuclear fuel, lithium, cobalt, tungsten, platinum group metals, and some forms of ferromanganese and coal, among other products. The exemptions cover many refined and raw forms of the materials.

Industry experts said this correlates with the Trump administration's aspirations to enhance US manufacturing, which in some cases depends on imports of raw materials and chemicals to produce value-added products like equipment, parts and batteries.

"Keeping raw material costs down is vitally important to building out the supply chain," said Chris Berry, founder and president of House Mountain Partners, a battery metals investment consultancy. "Until we can find a way in this country to build mining capacity faster, we're still going to be reliant on friend and foe alike for these raw materials, both raw and processed."

The White House did not respond to emails and a phone call seeking comment about the exemptions.

The Trump administration slapped hefty tariffs on dozens of countries — including top trading partners such as China, Vietnam and the EU — while launching a 10% minimum duty on all other countries. The executive order exempted Canada and Mexico, which face other tariffs, as well as products like steel, aluminum and vehicles that are already subject to previously announced import duties.

The 10% minimum tariff is set to go live April 5 and the rest of the country-specific duties will begin April 9.

The import taxes reshape global trade, suddenly making it much more expensive for US buyers to source many products from other countries, except for the exempted items.

Intended to boost manufacturers

The executive order appears to exempt materials listed in Annex II, including many metals, from both the 10% minimum tariff and the tougher country-specific import taxes. The goods listed in "Annex II to this order, consistent with law, shall not be subject to the ad valorem rates of duty under this order," the executive order reads. Ad valorem rates are the tariffs outlined in the new trade policy.

"I think there is some reality baked in here," Ken Hoffman, founder and CEO of minerals consultancy Traubenbach Associates, said in reference to the difficulty of trying to reshore some manufacturing. "The US can back the domestic industry but realizes this will take some time."

Hoffman was previously McKinsey & Company's head of battery materials strategy.

The exemptions also mean that some miners and project developers will not get the potential benefit of trade barriers for metals and minerals they dig up in the US. Some miners and metal producers with US operations could benefit from tariffs as the trade measures ensure higher domestic prices.

The National Mining Association, a US trade association, declined comment, saying it was canvassing its members about the tariffs.

The National Association of Manufacturers, also a US trade group, did not respond to a request for comment.

Impact could be limited

Some industry experts doubted the tariffs or the exemptions for raw materials would quickly bolster US manufacturing.

"It is quite the list," said David Davidson, an analyst at Paradigm Capital. "I guess it just shows how dependent the US is for critical materials. Will that be the carrot needed for reshoring? Unlikely. But it can't hurt."

Although the list included copper, Davidson and other analysts expect the US to tax imports of the metal after the administration finishes a national security probe.

"[There's] too much noise, and the details will keep changing," said David Harquail, chair of Franco-Nevada Corp., a gold and energy royalty and streaming giant. Harquail added that the bigger picture to the tariffs is the extent of economic damage they might do.

"That will impact metal demand," he said.