Trumps tariffs cause increasing anxiety for multi billion dollar copper industry

A top copper producer has warned that uncertainty over new U.S. import duties is stirring worry across the $250 billion market as the industry waits for more information, just 2 weeks before the measures take effect.

In early July, Trump announced plans to slap a 50 percent tariff on imported copper beginning August 1, but he did not specify whether the duty applies to raw ore, fully refined metal, or unfinished products. That lack of detail has left miners and manufacturers scrambling for answers on timing and scope.

Codelco chair Máximo Pacheco said the ambiguity is hard to handle. “Our customers have some anxiety, and they need to understand where all this will end,” he told reporters. 

He added that open trade “is valuable for both parties” and that Chile stands ready to boost refined copper exports to help support U.S. factories. Codelco is a Chilean state‐owned firm that is the world’s largest miner of copper and a large supplier to the American industry.

The proposed tariffs would hurt a wide range of industries

Industry leaders have warned that the proposed tariffs could hurt vital American sectors, ranging from electric vehicle makers to data‐centre operators and defence contractors. Chile, which has a free‐trade pact 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 that makes 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 pivot to domestic production unlikely.

The looming levies come as the global copper sector struggles to boost the output of mines. Rising development costs along with decreasing grades of ores have made new projects more expensive and slower to start.

For Codelco, sales of copper cathodes to the U.S. account for 11 percent of its total cathode business. Pacheco said he still did not “fully understand what it is that the U.S. is trying to achieve with this announcement.”

Analysts suggest that the US consider exceptions

Some analysts have suggested Washington may soften the tariffs or carve out exceptions. In past disputes, the administration has backed down on certain levies, a phenomenon traders jokingly call “Taco” trade, for “Trump Always Chickens Out.”

Another scenario under discussion is imposing duties only on items semi-finished like wire, tubing and strip, while allowing refined copper cathodes to be imported without extra fees.

“If the [copper] tariffs go into effect, the domino effect on end users, such as data centres and the automotive sector, will be very strong,” Gracelin Baskaran from Washington’s Critical Minerals Security Program said. 

She added that once U.S. firms feel the pinch, “they will very likely request a review, because it threatens our growth agenda.”

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