2026 Copper Tariffs:

OEMs are not in a position to redesign products around tariffs—and they shouldn’t be. Your focus is on performance, reliability, and delivering value to your customers.

But under the 2026 copper tariff’s structure, where your product is built and how the components are sourced directly impact cost.

Not all products are affected by the 2026 copper tariffs.

If copper content is 15% or less of total product weight, the product is not subject to copper tariffs.

When this is the case, no additional cost mitigation strategy is required—the tariff does not apply.

When copper content exceeds this threshold, OEMs must evaluate manufacturing location, sourcing strategy, and product structure to minimize tariff impact.

That leaves you with three real options.

If your product is built in the U.S., the derivative tariff does not apply to the finished assembly in the same way.

While individual components may still carry tariffs, the full-value tariff on the completed product is eliminated.

When this makes sense:

• When the total cost of producing in the U.S. is lower than the total cost of producing in Mexico + tariff charge

Federal Advantage:

With manufacturing facilities in both the United States and Mexico, Federal Electronics offers the most cost competitive solution based on product configuration and tariff impact.

If tariff policy changes, essentially favoring one region over the other, production can quickly be shifted to the U.S. or Mexico with:

• Existing tooling and fixtures
• Established processes
• An active material pipeline

In many cases, this is a relatively light lift.

If at least 95% of the copper (by weight) used in your product is smelted in the United States, the tariff can be reduced to approximately 10% of total product value.

When this makes sense:

• When manufacturing in Mexico is still more cost-effective—even with the new tariff

Tradeoff:

• Achieving the 95% threshold can be difficult

In practice, while U.S.-sourced wire may be available, many terminals and connectors are manufactured overseas. These components can account for a significant portion of total weight—often making it difficult to meet the threshold.

Federal Advantage:

Federal works directly within its supply chain to:

• Identify compliant materials
• Validate copper origin
• Evaluate feasibility during quoting

This allows you to pursue this option without redesigning your product or managing supplier complexity internally.

If your cable or wire harness assembly is integrated into a higher-level system—such as a box build, back panel, or electro-mechanical assembly—it may fall under a different HTS classification and move outside the scope of copper derivative tariffs.

When this makes sense:

• When a transformation into a functional product with a different HTS code will provide additional cost benefits while eliminating the tariff
• When the 95% U.S.-copper threshold is not achievable

Tradeoff:

• Requires significant effort, including a commitment to a higher-level outsourcing strategy, quote activity, supplier qualification, etc.
• Implementation can take time to achieve maximum benefit

Federal Advantage:

This is where Federal Electronics is uniquely positioned.

Unlike many cable assembly providers, Federal offers:

• Cable and wire harness assembly
• Printed circuit board assembly (PCBA)
• Box build assembly and electro-mechanical integration

We can:

• Integrate your harness into a higher-level assembly
• Source and fabricate supporting components (including custom sheet metal, enclosures and precision machined parts)
• Deliver a fully integrated and tested system

Different product function. Different import condition. Different cost outcome.