Trump's 50% copper tariff poses indirect risks to Peru and Chile via China trade flows

On August 1st, a fifty percent tariff on copper imports will take effect in the United States, a move justified under national security grounds that has sent tremors through the global metals market. The announcement came from Donald Trump, who invoked the same legal framework—Section 232 of the Trade Expansion Act of 1962—that he used in 2018 to impose duties on steel and aluminum. What distinguishes this tariff is its scope and its teeth: there is no cap on the rate and no expiration date, and it extends not just to raw copper but to refined copper and manufactured products derived from it.

For Peru and Chile, the world's second and first largest copper exporters respectively, the initial calculus seems straightforward enough. Peru sends only 3.7 percent of its copper exports to the United States, making the direct blow appear manageable. The real exposure lies elsewhere—in the machinery of global trade itself. A Boston Consulting Group analysis estimated that the tariff could add $8.6 billion to the cost of copper imported into America, a figure that does not account for secondary effects if the duty spreads to downstream products. The tariff will make copper more expensive for American manufacturers and consumers, but it will not, in the near term, spur the domestic production that Trump's administration claims to be protecting. According to Alonso Macedo, an economist at the Peruvian Institute of Economics, opening new mines, refineries, or processing plants takes years, sometimes decades. What will happen immediately is that American companies will pay more for the metal they need.

Peruvian economists have offered a more nuanced reading of the situation. Jorge Manco Zaconetti, a researcher at the National University of San Marcos, notes that the bulk of Peru's copper exports flow to China, Japan, and South Korea, not the United States. The exception is Cerro Verde, where Freeport-McMoRan operates and ships roughly 240,000 tons annually to American buyers. For those shipments, the tariff will bite. But the larger worry, articulated by Carlos Casas of the Pacific University, is what happens next. If the tariff reshapes global trade flows—if it forces Peru and other suppliers to seek new markets or if it triggers a broader commercial conflict—then the damage could emerge over months and quarters, not days.

The true peril lies in contagion. China is Peru's largest buyer of copper, absorbing the lion's share of exports. If the American tariff ignites a wider trade war that reaches China or the European Union, Peru loses. The metal that Peru sells will become less valuable, and the demand that has kept prices elevated will soften. Casas observes that Peru is currently in a favorable position: copper prices are historically high, and gold prices are rising alongside them—a rare occurrence that reflects both copper's strategic importance and gold's role as a safe haven as the dollar weakens. But that window is fragile. The elevated gold price has already sparked a surge in illegal mining and underground economies, particularly as countries like China and India and central banks worldwide accumulate large volumes.

Chile, which sends 15.7 percent of its exports to the United States and derives roughly half of that from copper, faces a more direct exposure. Rodrigo Vergara, former president of Chile's central bank, cautioned against premature optimism. Chile is a small, open economy, and a fifty percent tariff of this magnitude will leave marks, even if those marks take time to appear. The effects, Vergara suggested, may not surface until late 2025 or early 2026, when the full weight of reduced demand and lower prices settles in.

What makes this moment uncertain is not the tariff itself but what it might trigger. The Trump administration has shown willingness to negotiate exemptions—Canada and Mexico are already excluded, while Japan, South Korea, and the United Kingdom face quotas rather than flat duties. Peru and Chile may yet secure similar relief. But if they do not, and if the tariff becomes the opening move in a sustained commercial conflict, then the copper market's architecture will shift. Prices that have climbed to historic highs could fall sharply. The economies built on selling copper to a world that wants it will have to reckon with a world that wants less of it, or can afford less of it. For now, Peru and Chile wait.