Trump’s copper tariff plan may disrupt U.S. supply chains

US copper purchasers are preparing for significantly higher expenses if a 50% duty on processed copper is imposed from August 1, industry producers and analysts say.

With Washington on the verge of applying these duties, firms across the international copper network are uncertain about how extensive it will be.

Chile, the source of approximately 70% of the metal entering the U.S. market, is seeking an exclusion as per a Bloomberg’s report. Officials in Santiago emphasize that American manufacturers rely on foreign supplies for nearly half of their copper and face limited quick substitutes.

Alice Fox, a Macquarie metals specialist, cautioned that applying duties to intermediate copper goods, including wires, rods and tubes, would raise manufacturing costs for domestic fabricators, hindering their competitiveness abroad.

“Undoubtedly that would put pressure on makers of copper products in the U.S., and so it is a concern,” she said.

Ivan Arriagada, Antofagasta Plc’s CEO, reinforced this point at a news conference in Santiago last Thursday. He added that while mine profit margins might improve, increased costs for raw material could squeeze U.S. producers.

Antofagasta and its Chilean counterparts derive roughly one-tenth of their copper revenue from the American market, compared with far larger volumes sent to China. Although such a duty on processed metal may promote local smelting and boost mining returns, it probably won’t prompt major new U.S. mining ventures, given the multi-decade timeline from exploration to operation.

Aurora Williams, Chile’s Mining Minister, noted that her administration still awaits an official announcement outlining the tariff’s specifics. She added that discussions with U.S. officials are underway to negotiate exemptions for Chile’s exports.

“Chilean mining production, in all its gambits, has high responsibility, is highly valued and highly necessary for manufacturing in the U.S.,” Williams told reporters.

Canada promises to fight back against copper tariff

Similarly, Canada which is ranked as the United States’ second-largest import source of copper, has opposed the measure.

Canadian Industry Minister Melanie Joly termed the move “illegal” and promised to fight back. She warned the levies would hurt Canadian labor and breach international trade agreements.

Arriagada also observed that, following implementation of the 50% duty, U.S. purchasers would turn to existing inventories, which could suppress near-term consumption. According to Macquarie’s team, it may take roughly nine months for American stockpiles to return to typical levels, although the broader market fundamentals stay largely in equilibrium.

Bloomberg Intelligence figures indicate that over the last year, America’s domestic ore yielded approximately 850,000 tonnes of refined copper, while imports totaled about 810,000 tonnes. Secondary sources and stock releases accounted for roughly five% of consumption.

The country’s two active smelting facilities process only a fraction of that output, leaving around fifty% of mined ore to be exported, approximately half of which is destined for Chinese markets.

Bloomberg Intelligence analysts Alon Olsha and Richard Bourke caution that absent extended levies on intermediate copper products, America will remain reliant on imports and face ongoing cost pressure.

“Without broader incentives and tariffs on semi-finished goods, import reliance will likely persist and hurt copper consumers,” they wrote.

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