US Copper Export Controls: National Security vs Market Access Debate

Understanding US Copper Scrap Export Controls: National Security vs. Market Access

The debate over US copper scrap export controls has intensified as industry leaders highlight the critical balance between national security concerns and maintaining global market access. With more than half of US-origin copper scrap leaving American shores annually, the push for strategic export regulations aims to revitalize domestic manufacturing while ensuring continued trade relationships.

What Are the Current Copper Scrap Export Dynamics in the US?

US copper scrap exports have reached unprecedented levels, creating significant challenges for domestic processors and manufacturers. According to Prime Materials Recovery (PMR) estimates, 50.5% of US-origin copper scrap is exported annually, with China alone receiving approximately 37% of these exports in 2023.

The Copper Development Association (CDA) has identified five specific Schedule B codes for recycled copper that are being targeted for potential export controls. These codes classify high-purity copper scrap (>99.9%) that is essential for critical infrastructure manufacturing and advanced technology applications.

Bernie Schilberg, CEO of PMR, explains the market distortion:

"Predatory pricing and circumvention practices have undercut the US industry's ability to invest in domestic refining capacity for decades. We're not asking for protectionism—we're calling for smart, balanced export controls."

This export-driven market distortion has been cited in 80% of domestic processor complaints according to the CDA's Section 232 investigation response. The impact is evident in practical examples, such as PMR's Ames joint venture in North Carolina, which reduced rod mill capacity by 40% since 2020 due to ongoing scrap shortages.

The price disparities created by foreign buyers with government subsidies have made it increasingly difficult for US consumers to compete for high-quality scrap. This competitive disadvantage has hindered long-term investment in domestic refining capacity, weakening the overall supply chain resilience for this critical material.

Why Are Industry Leaders Calling for Export Controls?

National security concerns form the cornerstone of arguments for copper scrap export controls. Copper is officially designated as a Critical Material in the US National Defense Stockpile Act (50 U.S. Code § 98), recognizing its essential role in defense, energy, and communications infrastructure.

Industry data reveals that high-purity scrap—the most valuable for domestic manufacturing—constitutes 68% of exported copper scrap according to PMR metrics from 2024. This outflow reduces strategic material availability for domestic needs at a time when demand for high-grade copper is surging.

Schilberg emphasizes the environmental and economic logic behind keeping these resources domestic:

"We're giving up a material with inherent financial and environmental advantages. Why would we keep exporting that to our competitors?"

The environmental case is compelling—EPA supply chain analysis indicates transportation emissions would drop by approximately 30% with domestic processing compared to shipping scrap overseas and importing finished products back.

Economic revitalization presents another powerful argument. "Backward integration" opportunities for wire and cable manufacturers would allow companies to secure their supply chains through vertical integration, similar to Southwire's successful model. This approach could revitalize multiple sectors of US manufacturing, including:

• Strip mills for flat-rolled products
• Rod mills for wire manufacturing
• Tube mills for plumbing and HVAC applications
• Casting operations for complex components

The experience of other countries supports this strategy. Japan's 2014 export controls increased domestic refining capacity by 22% within just three years, according to the Japan Oil, Gas and Metals National Corporation (JOGMEC) 2017 report.

What Specific Export Control Measures Are Being Proposed?

Industry leaders are advocating for targeted control options rather than blanket bans. These measures include:

• Export licensing systems for high-purity copper scrap using the Automated Export System (AES) with real-time tracking
• Improved data transparency requirements to prevent circumvention
• Prioritization mechanisms for domestic supply while maintaining some export capabilities
• Selective restrictions focusing on the five Schedule B codes in the 7404.00.xxxx series

A tiered tariff structure has also been proposed with graduated rates:

• 0% tariffs on refined metal (ideal scenario)
• 25% tariffs on semi-finished products
• 50% tariffs on derivatives

Schilberg clarifies the balanced approach:

"Smart, balanced controls should include licensing, data transparency, and domestic supply prioritization—not just bans. Those are the things that ensure US recyclers still have access to global markets while protecting the interests of American industry and workers."

Implementation would follow a five-year timeline to allow market adjustment, with legislative commitment beyond executive orders to provide the policy certainty needed for major investments. Similar EU waste shipment regulations demonstrated effectiveness, reducing non-compliant exports by 45% according to Eurostat 2023 data.

The focus on long-term policy stability reflects industry recognition that transforming the copper recycling landscape requires sustained commitment rather than short-term interventions.

How Might Export Controls Impact Different Market Participants?

The impact of export controls would vary significantly across the copper supply chain. Domestic processors stand to gain increased access to high-quality scrap materials with cost reductions estimated at 35% for high-purity scrap, according to industry projections.

This improved access would create enhanced investment opportunities in processing infrastructure, strengthening the position of suppliers to data centers and critical infrastructure projects—sectors experiencing explosive growth in copper demand.

However, the Recycled Materials Association (ReMA), representing more than 500 small recyclers, has voiced strong opposition to these restrictions. ReMA estimates its members could face a 15-20% revenue drop in the short term if export markets are constrained.

Bernie Schilberg addresses this resistance:

"ReMA focuses on short-term margin pain while ignoring long-term supply chain resilience. The temporary adjustment period would ultimately create a healthier ecosystem for all participants."

International trade war impact on copper also present complexities. Under USMCA provisions, Canada and Mexico could potentially implement retaliatory tariffs within 90 days of US export control implementation. Canada's 2024 lobbying efforts against controls successfully secured a tariff exemption for copper wire rod, demonstrating the diplomatic challenges in restructuring regional supply chains.

The market adjustment would likely occur in phases:

1. Initial price adjustment as export demand decreases
2. Gradual investment in domestic processing capacity
3. Expansion of downstream manufacturing
4. Equilibrium with higher domestic consumption and strategic exports

What Recent Policy Developments Are Affecting the Copper Market?

Recent announcements from the Trump administration have accelerated discussions around copper trade policy. A 50% tariff on copper imports is scheduled to take effect on August 1, 2025, according to White House Executive Order 14121. This complements the Section 232 investigation launched in May 2025, with a 120-day review period specifically examining scrap controls.

The dual approach addressing both imports and exports signals a comprehensive strategy to rebuild domestic copper processing capability. Schilberg frames this approach not as protectionism but as necessary correction:

"This isn't protectionism—it's strategic realignment after 40 years of policy failure."

The Copper Development Association filed a detailed response to the Section 232 investigation, advocating for "smart, balanced export controls" that would prioritize domestic supply while maintaining some global market access. This nuanced position reflects industry recognition that pure protectionism could backfire through retaliatory measures.

The policy developments follow historical precedent—Trump's 2018 steel tariffs resulted in a 12% domestic capacity increase according to the US International Trade Commission Steel Report 2023, offering a potential model for copper sector revitalization.

How Would Export Controls Affect Domestic Investment?

Establishing export controls could trigger significant domestic investment in copper processing infrastructure. The Copper Development Association projects potential wire and cable manufacturing investments of $2.1 billion if policy certainty is established.

Investment trigger conditions include:

• Policy clarity and certainty extending at least five years
• Legislative backing rather than executive orders alone
• Specific focus on the five high-value copper scrap Schedule B codes
• Gradual implementation allowing for market adjustment

Schilberg provides a timeline for these investments:

"With policy clarity, we'll see new strip mills, rod mills, and tube mills return within 24 months. The long-term goal is a five-year remediation of a 40-year policy failure."

Evidence of investment responsiveness already exists—PMR's IMC subsidiary increased processing capacity by 18% following initial policy signals in 2023. This backward integration enables manufacturers to control their supply chains through vertical acquisition or partnership strategies.

The investment response would likely follow geographic patterns of:

1. Expansion at existing facilities with unused capacity
2. Reopening shuttered operations in traditional manufacturing regions
3. New greenfield investments near growing end-markets like data centers
4. Co-location with renewable energy manufacturing hubs

What Are the Future Demand Drivers for Copper?

The timing of potential export controls coincides with unprecedented growth in copper demand driven by multiple converging sectors. Clean energy transition represents a primary driver, with the International Energy Agency's Net Zero Scenario projecting 26 million electric vehicles by 2030—requiring an additional 3.7 million tons of copper.

Digital infrastructure growth presents another explosive demand center. According to CDA Technical Briefs from 2025, AI data centers require five times more copper than traditional server facilities due to:

• Higher power density requiring more robust electrical infrastructure
• Increased cooling system complexity
• More extensive bus bars and power distribution equipment
• Redundancy requirements for critical applications

The industry consensus recognizes the strategic importance of recycling:

"Recycling must supply 50% of green transition copper by 2040 to meet climate goals."

Tesla's ambitious 20 TWh battery target alone would require approximately 450,000 tons of copper, as revealed in their Q2 2025 earnings call. This single company's needs illustrate the scale of demand growth facing the copper market.

S&P Global Copper Outlook projects a global copper supply forecast deficit of 8.4 million tons by 2030, creating a strategic imperative to maximize recovery and domestic processing of recycled materials. This deficit represents more than a third of current global production, highlighting the critical nature of supply chain optimization.

FAQ: US Copper Scrap Export Controls

How would export controls affect copper scrap prices in the US?

Export controls would likely increase domestic scrap availability, potentially moderating prices for US consumers. Industry analysis suggests a 12-18% price adjustment period during the first year, followed by stabilization as domestic consumption increases. The controls would create more predictable market conditions for long-term planning and investment, reducing the volatility caused by foreign buying patterns.

Would export controls violate international trade agreements?

While WTO rules generally restrict export controls, Article XXI provides national security exceptions that would likely apply to critical materials like copper. The specific implementation approach would determine compliance with trade agreement obligations. Export licensing systems with transparency requirements would face fewer challenges than outright bans. US tariffs and trade implications allow for national security exemptions but also permit retaliatory measures under certain conditions.

How quickly could export controls stimulate domestic investment?

Industry leaders suggest that with policy certainty, significant investment could begin within 12-24 months. PMR's experience indicates initial capacity expansion at existing facilities could start within one year, while new facilities would require 2-3 years for permitting and construction. A full five-year buildout plan would allow for comprehensive domestic capacity enhancement across the processing and manufacturing chain.

What alternatives exist beyond export controls?

Alternative approaches include:

• Domestic content requirements for government infrastructure projects
• Tax incentives for domestic processing facilities
• R&D support for advanced recycling technologies
• Strategic stockpiling programs for critical materials
• Public-private partnerships for processing facility investments

Each approach offers different advantages but lacks the immediate market-correcting impact of targeted export controls.

How would small recyclers be affected by export controls?

Small recyclers might face initial market adjustments but could benefit from more stable domestic demand over time. Transition assistance programs could include:

• Technical support for meeting domestic processor specifications
• Access to working capital during market adjustment
• Regional consolidation incentives to achieve scale
• Training programs for value-added processing

The experience in the EU suggests small recyclers can successfully transition to domestic supply chains with appropriate support mechanisms.

Comparative Analysis: Global Copper Scrap Export Policies

China's approach to copper scrap has focused on import restrictions rather than export controls, using increasingly stringent quality standards to develop domestic processing capacity. This strategy transformed China from primarily an importer of raw materials to a net exporter of finished products within a decade.

Japan designated copper as a strategic material, implementing monitoring requirements for exports while providing incentives for domestic consumption. This balanced approach maintained essential export relationships while ensuring domestic manufacturers maintained priority access to recycled materials.

The European Union implemented comprehensive waste shipment regulations with documentation requirements that effectively reduced non-compliant exports. This regulatory framework allowed legitimate trade while preventing circumvention practices that undermined environmental and economic objectives.

South Korea developed tax incentives for domestic processing that expanded value-added production without explicitly restricting exports. This market-based approach encouraged investment in advanced processing technology while maintaining trade relationships.

Canada maintains an open trade policy with minimal restrictions, functioning as an integrated part of the North American supply chain. This approach recognizes the cross-border nature of manufacturing but depends on continued access to the US market for finished products.

Investors and industry stakeholders continue to monitor copper price predictions and develop copper investment strategies that account for these evolving regulatory frameworks, as policy decisions will significantly impact future market dynamics.

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