Pipe Valves
Sourcing Guide & Market Intelligence

Tariffs to negatively impact the distribution and conditioning systems equipment sector

• The Trump Administration’s reciprocal tariffs, which apply general tariff rate increases to most leading US trade partners, are set to take effect on August 7, after the administration finalized the rates on August 1. These changes will significantly increase the tariff rate on leading distribution and conditioning systems exporting countries, including the European Union (15.0%), Canada (35.0%), China (54.0%), Mexico (25.0%), Japan (15.0%), and South Korea (15.0%).
• Distribution and conditioning systems equipment manufacturers in the United States will pay more for many foreign components and parts, such as heating and cooling equipment. Major manufacturers that operate in these markets, including Carrier, Daikin, Lennox, and Trane, have a manufacturing presence in Mexico and source components from tariff-impacted countries like China.
• According to the Heating, Air-Conditioning, & Refrigeration Distributors International (HARDI), over 66.0% of heating, ventilation, air conditioning, and refrigeration products are made in or use components imported from Canada, China, or Mexico. As price increases are passed down the supply chain, buyers will likely see price increases for key distribution and conditioning systems equipment.
• China is even more prevalent in several distribution and conditioning component markets, raising upstream supply chain risk following these tariffs. For example, according to the International Energy Agency, 95.0% of heat pump compressors were manufactured in China in 2023, and China accounts for half of the global trade in heat pump components.

Increased tariffs on copper imports take effect

• On August 1, the Trump administration implemented 50.0% tariffs on imported copper. Chile and Canada will be most impacted by these tariffs, as they account for a combined 87.0% of all copper imports in the United States.
• However, these tariffs are less sweeping than initially expected, only applying to semi-finished copper products, while excluding high-purity refined copper and copper input materials, such as ore and concentrate. As leading importers, such as Chile and Canada, have both high copper mining and refining capacities, they will likely avoid most of these tariffs by either exporting the copper in its unrefined form or refining the copper before exporting it to the United States
• These copper tariff exemptions limit the impact on the electronics and electrical equipment sectors because these applications require refined copper due to its optimal conductive properties.
• Thus, the prices of metal alloys that include copper, consumer products made from copper, tools, plumbing, corrosion-resistant alloys, and construction materials made from copper are forecast to rise by an average of 39.2%, according to the Yale Budget Lab.

Crude oil prices dip, but natural gas and fuel prices remain volatile in 2025

• Oil prices have been falling with the introduction of higher tariffs and the predicted decline in global demand. The OPEC+ group of countries also announced they would be unwinding production cuts and increasing their collective output target for May by 411,000 barrels per day.
• Trade wars, ongoing conflict between Hamas and Israel, and general unrest in the Middle East are causing uncertainty surrounding oil prices, which has led to volatility in prices. In the third week of May 2025, crude oil prices hit $63.67 per barrel, but volatility remains as geopolitical concerns remain.
• Natural gas prices rallied early in 2025 with colder-than-usual temperatures in the United States and high demand, topping out at $4.68/MMBtu in March. Prices have since fallen with the onset of trade wars and weakening demand projections to $3.64/MMBtu in the third week of May 2025.
• The national average of gasoline prices has been rising slightly due to refinery maintenance/outages and blending issues, hitting a national average of $3.15 per gallon in the third week of May 2025. However, gasoline futures have been volatile, falling due to fears of oversupply and deepening concerns about weakening demand with tariffs, but rising after trade deals.