Trump's 50% Tariff on Copper May Squeeze US Metal Buyers

On July 10 (Thursday), according to producers and analysts, US copper buyers will face a hefty price tag if President Trump of the US proceeds with imposing a 50% tariff on copper cathode rather than products like wires.

As Trump prepares to impose a 50% tariff on imported copper starting from August 1, the global supply chain is in a state of anxiety over the details of this measure. Chile, which accounts for approximately 70% of total US copper exports, is seeking an exemption, arguing that the US manufacturing sector has few alternatives given that nearly half of the country's copper demand relies on imports.

Macquarie analyst Alice Fox stated that taxing US manufacturers of intermediate products such as copper wires, copper billets, and copper pipe & tube for purchasing foreign metals will drive up production costs and erode their international competitiveness.

"Without a doubt, this will put pressure on US copper product manufacturers, which is concerning," Ivan Arriagada, CEO of Antofagasta, told reporters in Santiago on Thursday.

For Chilean suppliers like Antofagasta, the US accounts for roughly one-tenth of their total copper sales, a level that pales in comparison to their exports to China. While imposing tariffs on copper cathode may increase domestic smelting volume and boost mine profits, these measures alone are unlikely to trigger large-scale mining investments. In the US, it may take decades from discovery to production.

**Seeking Exemptions**

Chilean Minister of Mines Aurora Williams said on Thursday that Chile has not received any formal notification and is unclear about the specifics of the 50% tariff, but has been seeking exemptions in discussions with US officials.

"Chilean producers export 'top-tier refined copper with a high degree of traceability, so we hope that this will be duly recognized not only in the US but across the entire market,'" the minister told reporters. "Chile's mining production, from any perspective, carries a high degree of responsibility and is highly valued and crucial for the US manufacturing sector."

Williams adopted a cautious stance towards Trump's statement, while Canadian Minister of Industry Melanie Joly vowed to "fight back." She told reporters on the sidelines of an event in Vancouver on Thursday that Canada condemns the "illegal" tariffs, calling them a direct attack on its workers. Canada is the second-largest copper supplier to the US.

Arriagada stated that the copper market may continue to experience volatility. Once tariffs are imposed, US consumers will draw on inventories accumulated in advance, thereby affecting demand. Macquarie estimates that this process will last nine months. Nevertheless, the global supply and demand fundamentals remain quite strong.

A report shows that last year, the US produced 850,000 mt of copper cathode from ore and relied on imports for another 810,000 mt, with 5% of demand met through recycling and inventory reduction. As there are only two active smelters in the US, they export about half of their semi-finished copper ore, half of which is sold to China.

Changing this situation will take time. Meanwhile, industry research analysts Alon Olsha and Richard Bourke stated that if tariffs imposed on refined metals do not apply to semi-finished copper products, these products may flood the market.

They wrote, "Without broader incentives and tariffs on semi-finished products, this import dependency may persist and harm the interests of copper consumers."

If tariffs imposed on refined metals do not apply to semi-finished copper products, these products may flood the market.

(Wenhua Comprehensive)