These Sectors Can Expect Copper Price Headwinds After Trump Tariff News
Added confirmation margins will be a focal point during March quarter reporting.
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Stocks are looking to notch a fourth-consecutive positive day and, with President Trump again signaling that softer-than-expected reciprocal tariffs are likely next week and based on what we see so far on Wednesday morning, the odds of it happening are pretty good.
However, while the president shared that tariffs will likely be more “lenient than reciprocal,” he also warned copper import tariffs could be implemented in the coming weeks, which is sooner than expected.
Previously, Trump threatened to impose a duty of as much as 25% on all copper imports. While that is being touted as a bid to drive domestic copper production, we know it will take years, not quarters, to ramp capacity. Once again, this is likely more of a Trump negotiation tactic, but we’ll put it on our list of items to monitor.
In the near term, the subsequent upward pressure on copper prices is going to be a margin headwind across multiple sectors, including housing, transportation and medical equipment.
In the housing sector, those higher input costs join other headwinds that will keep shares of Builders FirstSource BLDR and DR Horton DHI in the Bullpen. The other headwinds we’re referring to are the increased use of incentives reported by Lennar LEN, which clocked in around 13% in its just reported quarter. Management acknowledged that level is “outsized” compared to normalized incentive levels of around 5% to 6% and will be a factor in pressuring margins.
Coming off Monday’s Flash March PMI report from S&P Global, those comments on copper and incentives should serve as reminders that margins will be a focal point for the upcoming March earnings season as well as for June quarter guidance.
