A proposed 50% tariff on copper imports announced by former U.S. President Donald Trump has sent shockwaves through global commodity markets, with Chile and Peru—two of the world’s top copper exporters—facing heightened uncertainty over trade flows, investment, and fiscal stability.

The announcement drove copper prices up 12% on the New York exchange in initial trading, but analysts caution that any short-term gains could be offset by longer-term demand destruction in the U.S. market. A tariff of this magnitude could prompt importers to reduce orders or shift sourcing strategies, potentially leading to price volatility and oversupply in non-U.S. markets.

Chile Faces Disproportionate Exposure

Chile, the world's largest copper producer, stands to lose the most. In 2024, Chile exported approximately $6.3 billion in copper to the U.S., accounting for 12.8% of its total copper exports. Its copper represents 35.7% of total U.S. copper imports. While the U.S. is not Chile’s primary market, the potential disruption could still reverberate across Chile’s broader trade and fiscal landscape.

Codelco, Chile’s state-owned copper giant, has initiated an internal review to assess the operational impact. “It’s still unclear whether the tariff will apply to all copper products or if exemptions will be granted for countries like ours,” said Codelco Chairman Máximo Pacheco.

With Chile running a fiscal deficit of 2.9% of GDP in 2024 and public debt at 42%, the prospect of reduced foreign currency inflows and tax revenues from copper exports is raising alarms among policymakers. “If the U.S. becomes unprofitable, Chile will need to divert volumes elsewhere. But if U.S. demand drops and prices spike, it could flood other markets, pushing global prices down,” warned Jorge Montes, a mining law specialist.

The uncertainty is already weighing on investment sentiment. “Delays or downsizing of mining projects could hurt job creation and growth in regions heavily reliant on the sector,” said Humberto García, president of the Chilean Institute of Public Policy.

Peru Eyes Exemptions, but Risks Remain

Peru, the world’s third-largest copper producer, has less direct exposure. The U.S. accounted for just 2.4% of Peru’s copper exports in 2024, valued at $705 million. However, higher-value products such as cathodes and copper wire—totaling roughly $900 million in exports—are at greater risk.

“What’s unclear is whether the tariff targets raw copper only or includes processed goods,” said Rafael Zacnich, chief economist at ComexPerú. He noted that exemptions have been granted in past cases to allies like Canada and Mexico, raising concerns about unequal treatment under U.S. trade policy.

“If Peru isn’t excluded while others are, our competitiveness will be undermined,” he told local media outlet Gestión. Peru has since urged Washington to honor its free trade agreement by exempting Peruvian copper from the proposed duties.

Despite the uncertainty, many analysts believe global demand for copper—driven by energy transition, EVs, and infrastructure—remains structurally strong. Peru and Chile could, in theory, redirect shipments to Asia and Europe, though logistical and pricing challenges remain.

A Broader Test of Resource Nationalism

The proposed tariff underscores growing protectionist sentiment in U.S. industrial policy, particularly in strategic materials. But for global producers, the risks go beyond lost sales: prolonged uncertainty could distort investment cycles and disrupt supply chains at a time when the world is already grappling with resource security and decarbonization goals.

Chile’s copper exports totaled $50.86 billion in 2024, accounting for the lion’s share of its export revenue. In Peru, copper brought in $23.45 billion, making up nearly 30% of total exports. For both economies, any sustained disruption in U.S. trade flows could require not just market diversification—but a reassessment of long-term strategy in an era of shifting geopolitical trade alignments.