Copper has been in the headlines, for the electrical industry, much this year. Pricing has been like a roller coaster and now the number 6 is closer than ever before. Some will remember when it was less than a dollar. $3 and $4 were shocks. The forecast of $5 copper by S&P was viewed as “well into the future.” It’s now here and it would surprise many to see $6 very shortly. Year end?
Consider the past 30 days. 
One thing that the pricing has done is increase the visibility of copper. More people are understanding the role it plays in everyday life and the broader economy.
Chris Sokoll, president of DISC, who also spent much of his career in the wire industry, shared insights on what is happening, and its impact.
“The Copper Crunch: How Tariffs Are Shocking the U.S. Electrical Industry
If you’re in the electrical distribution world, you’ve probably felt the tremors coming from the copper market lately. And no, it’s not just the usual price swings—it’s tariffs. Big ones. The U.S. government recently slapped a hefty 50% tariff on copper imports, effective August 1st, and it’s sending shockwaves through the entire supply chain.
Let’s break it down.
The U.S. doesn’t mine enough copper to meet its own needs. We produce about 1.2 million metric tons a year, but we use closer to 1.8 million. That shortfall—roughly 600,000 tons—has to come from somewhere. Historically, that’s been Chile, Canada, Mexico, and Peru. But with these new tariffs, importing copper just got a whole lot more expensive.
So, what’s the big deal? Well, copper is the lifeblood of the electrical industry. It’s in everything—wiring, transformers, switchgear, you name it. If copper prices spike, so does the cost of doing business for electrical distributors, contractors, and utilities. And that’s exactly what’s happening.
Before the tariffs even took effect, importers were scrambling to bring in as much copper as they could. Ports were flooded with shipments trying to beat the deadline. Now that the tariffs are going live, we’re seeing a ripple effect: higher prices, tighter supply, and a lot of uncertainty.
For anyone in an electrical related business, this means juggling rising costs while trying to keep projects on track. Margins are getting squeezed, and lead times are stretching out. Some suppliers are even rethinking their sourcing strategies, looking for domestic alternatives—which, let’s be honest, aren’t exactly abundant or quick to scale up.
And here’s the kicker: building new copper mines in the U.S. isn’t a quick fix. It can take 10 to 20 years to get a mine from discovery to production. From exploration, feasibility studies, environmental impact, permitting, construction and ramp it all takes a lot of time, not to mention the roadblocks at each step. So even if we wanted to boost domestic output, it’s not happening anytime soon.
Meanwhile, the policy behind these tariffs is raising eyebrows. The idea is to protect national security and encourage domestic production. But critics argue it’s a short-sighted move that doesn’t solve the real problem: we simply don’t have enough copper, and tariffs don’t magically create more.
For the electrical distribution community, the best move right now is to stay agile. Keep an eye on pricing trends, talk to your suppliers, and plan ahead as much as possible. This isn’t just a blip—it’s a structural shift in the market.
Bottom line? Copper just got a lot more complicated. And for those of us in the trenches of the electrical world, that means adapting fast—or getting left behind. If you want to keep up on this and other issues facing the electrical distribution community subscribe to the DISC Monthly Flash Report.”
John Gross, aka Dr. Copper, in his weekly communique, also opined on the state of copper. He further broke down the copper market by sharing these market segments,
- “We have those companies that import copper cathodes, otherwise referred to as refined metal. They argue that tariffs should not apply because the United States does not produce enough copper, and therefore, they are forced to bring metal in. Tariffs, they say, will increase the cost of metal, and that will have to be passed on to their customers and will contribute to inflation.
- There are copper fabricators in the U.S. who have lost significant business to lower cost imports based on LME pricing, which is running at a 95¢ discount to Comex on a month-to-date basis. They need tariffs not only to level the playing field but also to mitigate steep financial losses and enable them to stay in business.
- We have manufacturing companies here selling to offshore markets, with Comex based prices that can’t compete against LME based suppliers.
- Then we have scrap dealers and the recycling industry, and this is where it gets ugly. Should there be a tariff on exports of copper scrap, or a quota on the quantity that can be exported? Should there be targeted tariffs on specific categories of scrap? Recyclers say there isn’t enough capacity to consume or refine all the scrap that is generated in the United States, and therefore, tariffs or export controls are not warranted. Further, they argue, we should be able to sell into the market that offers the best price, wherever that may be.”
He further shared a chart highlighting US Production and Consumption which supports Chris’ comment that demand exceeds production.
Further, in October 2024, the National Mining Association had an article titled “Copper: Powering America’s Future and Securing Our Supply Chains” further emphasizing the copper challenge and highlighting that “copper is the backbone of the future.”
Some stats / info:
- US has 48+ million tons of copper! And remember, we use about 1.8 million tons of refined copper … which means it is a diminishing resource
- Key mining states are Arizona, Nevada, Minnesota and Utah.
- A key challenge is permitting process and regulatory barriers, which can stretch “decades.” (comment – if this isn’t addressed, and it will be a combination of federal and state initiatives, then the tariff will not be enough to stimulate domestic output.)
Thoughts
Thank you to Chris and Dr. Gross for their contributions.
Earlier this week, Peter Zeihan shared observations on copper. In his video (and a transcript is also on his site, he comments that there are 4 key inputs to achieving the industrial renaissance that tariffs is supposed to support – copper, steel, aluminum, and labor.
The challenge is that increasing domestic production of all four takes time (and labor could be replaced, in some instances, with automation.)
As the price of copper increases,
- What will it do to current projects?
- What further price increases may occur (either “now” or come early next year on the more “traditional” price increase cycle)?
- What will be the impact on future construction projects? Copper is not only for the electrical element of a project. Plumbing is also heavily impacted. Will construction delays occur? Will projects be downsized to fit budgets? Will the renovation market increase?
In reality, it’s all only conjecture right now. Copper is hovering around $6.00. What, if any, is the upper limit … and there are interesting dynamics that could affect distributor sales or be share-taking strategies, rebates, in some instances commissions for distributor salespeople as well as, in some instances, manufacturer reps.
Are you looking at copper increases in a traditional “price pass-through” way or more as a sales and profitability strategy? A thought for distributors … GM$ are more important than GM%, no matter what pricing people say.
2 Comments
Chris Sokoll and Dr. Copper (John Gross) have captured the gravity of what we’re facing in the electrical industry. The 50% copper tariff isn’t just another price increase—it’s a fundamental shift that’s going to reshape how we do business in lighting and controls, especially in commercial construction.
The Lighting Industry Reality Check
Chris’s point about the U.S. production shortfall (1.2 million tons produced vs. 1.8 million tons needed) hits home for those of us in lighting and controls. We’re not just talking about wire and conduit here—copper is embedded throughout our entire product ecosystem: LED drivers, transformers, control panels, and the miles of wiring that connect smart lighting systems.
The industry is already responding. Signify is exploring production shifts from China to India and Indonesia, while many have announced price increases specifically citing tariff pressures. As one lighting professional recently noted, “Our projects and our clients do not have an extra 25% to spend on lighting and controls.”
Channel Impact Beyond Price Pass-Through
Chris’s observation about GM$ being more important than GM% is particularly relevant for lighting distributors right now. This isn’t just about passing through copper cost increases—it’s about fundamentally rethinking how we position value in an inflationary environment.
Smart distributors are already shifting strategies:
-Accelerating project timelines to capture materials before the August 1st tariff takes full effect
-Repositioning LED efficiency as a hedge against rising electrical infrastructure costs
-Emphasizing controls ROI to justify higher first costs with long-term savings
What the Lighting Industry Needs to Watch
Dr. Copper’s (John Gross) breakdown of market segments is insightful, but there’s a fifth segment worth considering: lighting and electrical equipment manufacturers who source components globally but serve primarily domestic markets. We’re caught between imported component costs and domestic pricing pressures.
The timeline concern Chris raised—10 to 20 years for new mines—means this isn’t a temporary adjustment. We need to plan for a structurally different cost environment. Morgan Stanley’s estimate of 400,000 tons of “extra” copper front-loaded into the U.S. might give us a six-month buffer, but that window is closing fast.
Recommendations for Industry Participants
For Distributors:
-Lock in pricing on high-copper-content products now
-Develop relationships with manufacturers who have diversified supply chains
-Focus on total project value rather than individual component costs
For Contractors:
-Accelerate material procurement on awarded projects
-Emphasize energy savings and smart controls ROI in proposals
-Consider copper-reduction strategies like aluminum conductors where code permits
For Specifiers:
-Front-load electrical and lighting specifications in project timelines
-Evaluate LED and controls packages that minimize copper content
-Build cost escalation clauses into longer-term projects
The Bigger Picture
Peter Zeihan’s point about copper being one of four critical inputs (along with steel, aluminum, and labor) for industrial renaissance is spot-on. But in lighting, we’re also dealing with semiconductor supply chains, rare earth elements for LEDs, and electronic components largely sourced from Asia.
The question Chris posed—”What will be the impact on future construction projects?”—deserves a direct answer for our industry: We’re likely looking at project deferrals, downsized lighting budgets, and increased focus on retrofit/renovation markets where existing electrical infrastructure can be leveraged.
Bottom Line
The copper tariff represents a structural shift that requires strategic thinking, not just tactical price adjustments. Companies that adapt their sourcing, pricing, and value propositions now will gain a competitive advantage as others struggle with the new reality.
Thank you to Chris and Dr. Copper (John Gross) for highlighting these critical dynamics. The electrical industry needs this kind of forward-looking analysis as we navigate what’s clearly going to be a challenging transition period.
David rightfully asked me what I thought Electrical Distributors should do. Below are my recommendations:
What Electrical Distributors Should Do to Manage Forward in the Copper Tariff Crisis
Based on the copper tariff crisis and market dynamics, here are the key strategies electrical distributors should implement immediately:
Immediate Actions (Next 30-60 Days)
1. Inventory Strategy Shift
-Front-load copper-intensive products before August 1st tariff takes full effect
-Focus on high-copper content items: transformers, switchgear, motor controls, large conductors
-Build strategic inventory on long-lead-time electrical equipment
-Negotiate with suppliers to lock in current pricing on Q4 deliveries
2. Supplier Diversification
-Identify which manufacturers have diversified supply chains (like Signify’s India/Indonesia shift)
-Develop relationships with domestic manufacturers who may benefit from tariff protection
-Map out alternative sourcing for critical copper-heavy products
Pricing and Margin Management
3. Rethink Pricing Strategy
-Shift focus from GM% to GM$ as Chris Sokoll suggested
-Implement dynamic pricing models that capture copper volatility
-Build copper escalation clauses into longer-term contracts
-Consider offering “copper hedging” services to large commercial customers
4. Value-Add Services
-Position yourself as the “tariff navigation expert” for contractors
-Offer supply chain consulting to help customers plan around material availability
-Provide market intelligence reports to key accounts showing cost trends
Customer Relationship Strategies
5. Proactive Communication
-Send weekly copper market updates to top accounts
-Host webinars on “Managing Electrical Costs in the New Reality”
-Become the trusted advisor on material substitutions and alternatives
6. Contract Restructuring
-Revise standard terms to include material escalation clauses
-Offer extended payment terms to customers who commit to larger orders
-Create “copper protection” programs for multi-phase projects
Operational Excellence
7. Technology Investment
-Implement real-time pricing systems that track copper futures
-Use data analytics to predict demand patterns and optimize inventory
-Invest in warehouse automation to handle increased inventory volumes efficiently
8. Sales Team Training
-Train sales staff on copper market fundamentals and tariff implications
-Develop talking points for value-based selling vs. price-based selling
-Create tools to help customers calculate total project cost impact
Strategic Positioning
9. Market Share Capture
-Target competitors’ customers who may be struggling with supply chain disruption
-Offer superior availability and delivery reliability as differentiators
-Position as the “supply chain stability” partner
10. Financial Planning
-Secure additional credit lines to finance higher inventory investments
-Hedge currency exposure if dealing with international suppliers
-Model cash flow scenarios under different copper price trajectories
Long-Term Adaptation
11. Business Model Evolution
-Consider vertical integration opportunities (acquire fabrication capabilities)
-Explore partnerships with domestic copper producers
-Develop expertise in copper alternatives (aluminum conductors where code permits)
12. Market Intelligence
-Subscribe to copper market analysis services
J-oin industry groups focused on supply chain resilience
-Monitor regulatory changes that could affect tariff policies
The Bottom Line for Distributors
The companies that will thrive are those that:
-Act as market makers rather than just order-takers
-Provide supply chain stability when others can’t
-Help customers navigate the new cost reality rather than just passing through increases
-Invest in intelligence and relationships that create competitive moats
This isn’t just about managing higher costs—it’s about positioning your distribution business as an essential partner in an increasingly complex supply chain environment. The distributors who execute these strategies well will gain market share as others struggle with the copper shock.
Key Takeaways
Immediate Priority: Front-load inventory and lock in pricing before August 1st tariff implementation.
Strategic Focus: Transform from a commodity supplier to a supply chain intelligence and stability partner.
Competitive Advantage: Use superior market knowledge and proactive planning to capture market share from less-prepared competitors.
Financial Preparation: Secure additional credit now to support increased inventory investments and extended customer payment terms.
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