Chile's Codelco and the Mining Association of Canada warn: US copper tariffs may suppress the US market

US President Trump's new 50% tariff on copper could throw the US market into turmoil, as major copper trading partners will seek alternative markets.

Trump announced the new tariff on copper imports at a cabinet meeting on July 8, but the White House has yet to issue an executive order to implement it. Trump has made tariff policies a cornerstone of his economic and foreign policies, and this copper tariff will be combined with previous 50% tariffs on steel and aluminum, a 10% global tariff on most goods, and "reciprocal" tariffs on individual countries.

Even without specific details, Chile and Canada have warned that the US will struggle to fill its domestic supply gap. These two countries collectively supply 86.8% of US copper imports.

In a statement on July 8, Máximo Pacheco, Chairman of Codelco, said, "So far, the US has not released any official information, so we are unclear about the specific measures that will be taken. For example, it is unclear whether this tariff will apply to all copper products, including copper cathode, and whether there will be exceptions for countries like ours."

"The only certainty is that in 2025, global demand for copper is growing at a rate of 3%, while production is not increasing. To cope with the energy transition, countries around the world, including the US, need more and more copper every day. As the world's largest copper producer, Codelco is and will continue to be a safe and reliable supplier, so we are very calm," he added.

Trump announced a national security investigation into copper tariffs on March 18. The results of the investigation have not yet been released.

According to data from S&P Global Market Intelligence, US refined copper production was 908,000 mt in 2024, while consumption was 1.62 million mt. A domestic supply gap of nearly 700,000 mt forces the US to rely on foreign supplies.

According to data from Market Intelligence Global Trade Analytics Suite, under HS code 7403, Chile accounts for 70.1% of US copper imports.

Canada and Peru are also major copper suppliers to the US, accounting for 16.7% and 6.9% of imports in 2024, respectively.

According to data from the Mining Association of Canada, the new tariff will have mixed impacts on the Canadian copper industry.

"For many Canadian copper producers, it doesn't matter because they sell their products to other markets in Europe and Asia. But for copper midstream companies based in Quebec, it's very concerning," said Pierre Gratton, President and CEO of the association, in a statement on July 9. ""We are waiting for the 232 report, but as usual, President Trump is jumping the gun. We need to figure out what this means, whether our trade negotiations cover copper, and how it will be implemented."

Following a meeting between the leaders of the US and Canada at the G7 summit in June, trade and tariff negotiations are ongoing.

"The North American copper market is highly integrated, so this will hurt copper producers who sell copper concentrates to Canada and manufacturers who buy refined copper products from Canada," Gratton added.

Patricia Barreto, a senior base metals analyst at S&P Global Commodity Insights, said that a 50% tariff on copper imports by the US would "severely disrupt existing trade flows" as exporters would divert shipments away from the US.

"This policy could lead to a significant reduction in US copper imports, resulting in a drawdown of accumulated inventory as domestic supply struggles to fill the gap," Barreto said. "Meanwhile, copper that would have gone to the US will flow into markets like China and the EU, helping to ease tightness and replenish inventory outside the US."

Hefty tariffs could lead to a significant increase in US copper prices relative to other markets.

"US copper prices will continue to trade at a premium to international benchmarks, reflecting both the rise in import costs and the ongoing uncertainty about future supply," Barreto added. "In contrast, global copper prices outside the US could face pressure until redirected supply eases previously tight markets."

Trump's announced tariff plan caused copper futures prices on the New York Mercantile Exchange (COMEX) in the US to surge 17.5% on July 8, hitting a record high, before pulling back slightly on July 9.

(Wenhua Comprehensive)