The potential imposition of tariffs on copper in the United States has raised concerns in Chile, the world’s largest producer and the primary supplier of refined copper to the U.S. (70%). At first glance, Chile appears to be the most exposed to this risk.
By Juan Carlos Guajardo
However, the situation requires a more complex analysis. Unlike other countries, Chile has balanced trade with the U.S., a free trade agreement in force and a competitive copper production without subsidies or dumping practices.
If tariffs are implemented, countries with trade surpluses and tariff barriers against the U.S. would be the most affected. This would impact Canada and Mexico, which account for 19% of U.S. copper imports. Companies operating in these countries, such as Glencore, Vale, and Grupo México, could face potential exposure. Meanwhile, Chile and Peru—which together supply 80% of the refined copper imported by the U.S.—could seek exemptions to mitigate this risk, indirectly benefiting the companies operating within their territories.
Beyond refined copper, the U.S. investigation into the copper market appears to target China while simultaneously seeking to revive its industrial capacity. With half of the world’s smelting capacity and nearly two-thirds of global copper consumption in finished products, China is a key player. However, since China consumes all its refined copper production, the U.S. cannot directly impact it through tariffs. Such measures would be ineffective, leading the U.S. to seek an indirect approach.
This is where copper scrap—a less visible but crucial component—comes into play. Thanks to its ability to be recycled without losing its properties, recovered copper accounts for one-third of global consumption. The U.S. exports over 880,000 tons of scrap annually, with 37% going directly to its main competitor, China, and another 40% to the rest of Asia.
With an annual refined copper deficit of 850,000 tons, a likely U.S. strategy would be to restrict scrap exports to encourage domestic processing. This approach is more feasible than building new smelters for concentrates, as recycling requires lower investments and shorter lead times.
This strategy is not exclusive to the U.S.; in Europe, the semi-manufactured copper industry is also advocating for restrictions on scrap exports. If these measures materialize, China would have reduced access to recycled copper, forcing it to process its own scrap and increasing its demand for concentrates and refined copper. In this scenario, mining countries such as Chile, Peru, Australia, the Democratic Republic of the Congo, and Zambia would face pressure to expand production and supply the global market.
While tariffs create uncertainty, they could also open opportunities. With global trade undergoing transformation, Chile and Peru must strategically position themselves to maintain their competitiveness and leadership in the copper market, carefully balancing their roles in the global reorganization with mining as a cornerstone of their economies.
Source: El Mercurio