Trump Can't Afford To Have a Trade War Cause a Recession, Ed Yardeni

Ed Yardeni, President at Yardeni Research, joins Bloomberg Surveillance for an extended discussion about the US equity rally and his updated S&P target amid tariff concerns.

President Donald Trump said he planned to implement a 50% duty on copper imports as part of a set of looming sectoral tariffs, while also indicating he could offer pharmaceutical manufacturers at least a year before applying a crippling 200% tariff on their foreign-made products.

Trump told reporters during a Cabinet meeting on Tuesday he was still planning tariffs on select industries, including drugs, semiconductors, and metals.

“I believe the tariff on copper we’re going to make it 50%,” Trump said when asked by a reporter what the rate on those products would be. Copper futures in New York surged as much as 17% after Trump’s comments, the largest intraday gain in data going back to at least 1988.

Trump said he expected to offer pharmaceutical manufacturers some time to bring their operations to the US before slapping tariffs of as much as 200% on their products.

An S&P 500 index of drugmakers turned negative after Trump’s comments, while shares of Eli Lilly & Co., Merck & Co. and Pfizer Inc. pared earlier gains.

“We’re going to give people about a year, a year and a half, to come in,” Trump said. “And after that they’re going to be tariffed if they have to bring the pharmaceuticals into the country, the drugs and other things, into the country. They’re going to be tariffed at a very very high rate, like 200%. We’ll give them a certain period of time to get their act together.”

Tariff Push

Trump has already announced investigations under Section 232 of the Trade Expansion Act of 1962 on each of those products, arguing that a flood of foreign imports was threatening national security. After those efforts are concluded, Trump is expected to move forward with the levies.

That effort is separate from Trump’s other move to announce new country-specific tariff rates, which would not apply to products hit under his Section 232 efforts. Trump earlier Tuesday insisted those country-specific tariffs would move forward at the beginning of August.

Read More: Trump Says He Won’t Punt on Tariffs Again, May Set EU Rate Soon

The copper rate, while long telegraphed, threatens to upend an industry that for decades subsisted on a combination of vibrant domestic production and steady imports from some of the US’s strongest trade allies. It also comes after Trump during his first term focused his raw materials trade war on steel and aluminum, leaving copper producers, traders and consumers relieved that they avoided market upheaval.

Trump’s directive also comes as the US and the rest of the world expect a dramatic surge over the coming decade in demand for the industrial metal, with data centers, automobile companies, power companies and others scouring the globe for necessary feedstock to increase electric vehicle output and electric grid capacity. Retooling power and transportation systems to run on renewable energy will require far more copper than the companies that produce it are currently committed to deliver.

The US consumed about 1.6 million tons of refined copper in 2024, according to the US Geological Survey. While the US has significant mines, producing some 850,000 tons of primary copper last year, it still relies on imports from key trade allies to fill the need. Chile is the largest import source, accounting for 38% of total import volumes, followed by Canada and Mexico at 28% and 8%, respectively. Net copper imports account for 36% of demand, according to Morgan Stanley research.

Drug Threats

Trump has been talking about pharmaceuticals since he began rolling out his tariff agenda, despite industry concerns that duties could wreak havoc on supply chains, exacerbate drug shortages and drive up costs for Americans.

He has long criticized foreign production of medicine as a threat to national security and raised the specter of tariffs to encourage drugmakers to manufacture domestically. Companies followed with a flurry of announcements about multibillion-dollar manufacturing investments in the US.

Any tariffs that are imposed are expected to have an outsize effect on Ireland, where a $54 billion (€47.6 billion) trade surplus with the US helped spur Trump’s wrath.

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