If the applied tariffs become permanent, a lower demand for raw materials from the Asian nation is expected. Of the total exported by Chile to China, copper accounted for more than 60% of shipments in 2024.
President Donald Trump’s decision to further raise tariffs on Chinese imports and put “on hold” the reciprocal tariffs on other countries sparked euphoria in the markets yesterday. However, increased pressure on the Asian giant could lead to lower demand for raw materials, including copper — Chile’s main export.
Shipments from China to the United States will be cut by more than half in the coming years if Trump’s tariffs on China remain in place, analysts say — a claim that gained more traction after Trump raised tariffs on that nation to 125% on Wednesday.
The consultancy Capital Economics notes that U.S. levies on the Asian country will cause Chinese product shipments to the U.S. to “fall by at least half over the next few years.” They also add that while U.S. tariffs on other countries “are being negotiated downward, they are likely to remain high for China, which will permanently impact trade between the two nations.”
Even the World Trade Organization warned yesterday that the trade war between the United States and China could reduce trade in goods between the world’s two largest economies by up to 80%.
Meanwhile, the South China Morning Post reports that the Chinese export sector is bracing for “a prolonged and devastating recession in transpacific trade,” citing an example of an exporting company that went from shipping “40 to 50 containers daily to just between 3 and 6 as a result of the tariffs.”
China’s importance for Chilean copper
China accounts for nearly 40% of Chile’s total exports, led by copper by far. Of the US$38.235 billion in Chilean exports to China in 2024, copper shipments — including concentrates and refined metal — made up 67%.
“Copper prices have been fluctuating in line with U.S. announcements. After the price hikes due to stockpiling over fears of tariff implementation, we’ve seen a steep decline due to concerns about the effects of the trade war on the global economy and copper demand in particular,” said Juan Carlos Guajardo, director of Plusmining.
Amid this scenario, some banks are beginning to revise their copper price forecasts downward. U.S. bank Goldman Sachs cut its forecast for copper prices in 2025 and 2026. Specifically, it lowered its estimate to US$4.01 per pound from US$4.41 in 2025, with a low point projected at US$3.765 in the third quarter.
Scotiabank also cut its forecast to US$4.0 per pound from a previous estimate of US$4.25, with a low of US$3.75 expected in the second quarter.
Could drop to US$3.2
A report from LarrainVial’s Research Department indicates that “copper inventories in warehouses could reach 1 million metric tons next year. In this scenario, copper prices could fall to US$3.20 per pound within the next 12 months.”
“Empirical evidence shows that the Chilean economy reacts with a 9–12 month lag to external shocks transmitted through adjustments in global financial market movements, the decline in copper prices, and fluctuations in the world economy, triggered by financial crises — in this case, driven by trade policies,” adds LarrainVial.
According to Álvaro Merino, executive director of Núcleo Minero, as long as uncertainty over the global economic outlook — caused by the trade war between two global giants — persists, “high volatility in the price of our country’s main mining and export product should be expected.” He forecasts that in 2025, the price of copper will range between US$4.0 and US$4.2 per pound. “Obviously, the highlighted risk factors, particularly the behavior of China — as the main consumer of copper, accounting for 60% of global demand — and the United States — the world’s leading economy — could change the range in which the red metal’s price will settle,” said Merino.
According to Cochilco, they are currently reviewing their copper price forecast, which will be released later this month.
Source: El Mercurio