Copper Market Braces for 50% U.S. Tariff Uncertainty

A top copper producer has expressed concern over the uncertainty surrounding new U.S. import duties, which are causing anxiety across the $250 billion market. The industry is awaiting more information just two weeks before the measures take effect. In early July, Trump announced plans to impose a 50 percent tariff on imported copper beginning August 1, but the specifics regarding whether the duty applies to raw ore, fully refined metal, or unfinished products remain unclear. This lack of detail has left miners and manufacturers seeking answers on the timing and scope of the tariffs.

Codelco chair Máximo Pacheco highlighted the challenges posed by this ambiguity. “Our customers have some anxiety, and they need to understand where all this will end,” he stated. He emphasized the importance of open trade for both parties and noted that Chile is prepared to increase refined copper exports to support U.S. factories. Codelco, a Chilean state-owned firm, is the world’s largest miner of copper and a significant supplier to the American industry.

The proposed tariffs are expected to impact a wide range of industries, including electric vehicle manufacturers, data-center operators, and defense contractors. Chile, which has a free-trade agreement with the United States, supplies over 60 percent of America’s refined copper imports. “If the U.S. really wants to develop more manufacturing of copper products, it is clear to us that they will need more copper cathodes,” Pacheco said, referring to the purified metal used to make rods and wires. While the United States does mine copper, it lacks the capacity to convert all of it into refined metal. Building the necessary smelters can take many years, making a quick shift to domestic production impractical.

The impending tariffs come at a time when the global copper sector is struggling to increase mine output. Rising development costs and decreasing ore grades have made new projects more expensive and slower to initiate. For Codelco, sales of copper cathodes to the U.S. account for 11 percent of its total cathode business. Pacheco noted that he still does not “fully understand what it is that the U.S. is trying to achieve with this announcement.”

Some analysts suggest that the U.S. may soften the tariffs or create exceptions. In past disputes, the administration has backed down on certain levies. Another scenario under discussion is imposing duties only on semi-finished items like wire, tubing, and strip, while allowing refined copper cathodes to be imported without additional fees. “If the [copper] tariffs go into effect, the domino effect on end users, such as data centers and the automotive sector, will be very strong,” said Gracelin Baskaran from Washington’s Critical Minerals Security Program. She added that once U.S. firms feel the impact, “they will very likely request a review, because it threatens our growth agenda.”