Trump announced on Monday night his intention to impose tariffs on copper, steel and aluminum, which could affect Chile. The CPC (Confederation of Production and Commerce) expressed its concern and the government is analyzing strategies to mitigate the impact. Experts warn that the measure could make U.S. manufacturing more expensive and affect trade relations.

What happened? Trump announced Monday night his intention to impose tariffs on copper, steel and aluminum as part of his "America First" policy aimed at strengthening U.S. industry.

He made the comment to journalists who accompanied him from Florida, where he held an event, to Washington DC.

Trump expressed his desire to implement across-the-board tariffs that are "much higher" than 2.5%, in order to protect the U.S. economy and encourage local manufacturing.

"I have in mind what it will look like, but I won't set it yet, but it will be enough to protect our country," Trump told reporters, according to Bloomberg.

He mentioned specific sectors such as semiconductors, pharmaceuticals, steel, copper and aluminum as possible targets of these tariffs.

The move, if it materializes, could have important repercussions for Chile, the world's largest copper exporter.

Why does it matter? The United States accounts for 11.3% of Chilean copper exports, which as of the third quarter of 2024 reached US$37,278 million, according to the Central Bank. The first destination is China, which represents 51.3% of the total.

For Chile, copper represents close to 50% of exports, which makes it a fundamental pillar of the economy. When the price of copper rises, the country receives more income from its exports. This increases the supply of dollars in the local market, which can lead to an appreciation of the Chilean peso against the dollar. The imposition of tariffs by the U.S., if it materializes, could reduce the competitiveness of this strategic resource, affecting both exports and tax revenues derived from mining.

Business concern. After a meeting that included Foreign Minister Alberto Van Klaveren and the president of the Confederation of Production and Commerce (CPC), Susana Jiménez, the business leader expressed her concern about Trump's announcement.

"From the CPC we are concerned about a pronouncement in this regard (...), since it is half of our exports and therefore would have significant repercussions," said Jimenez.

Jiménez, however, said that the private sector hopes that the measure will not materialize: "We know how important copper is for our economy, for our exports, but also for the whole world, because the energy transition process involves electrification, which requires a lot of copper".

Codelco, the world's leading copper miner, stated that it is "attentive" to the evolution of the recent statements made by the President of the United States and that it will remain "in coordination with the Foreign Ministry".

Task Force on Trump's economic measures. The Boric administration and the private sector will analyze Trump's next steps and evaluate strategies to mitigate possible economic impacts.

At the end of the meeting with the CPC, Van Klaveren informed that "a working group was established through the Undersecretariat of International Economic Relations (Subrei) in coordination with the Ministry of Finance" to "analyze Chile's main trade flows with the United States and to evaluate to what extent these flows could be affected".

"We believe that the relationship with the United States is a very positive relationship from a commercial point of view. That from the priorities of the Trump administration, is a positive trend," he said, according to Diario Financiero.

Trump's proposal is part of his attempt to revitalize strategic industries in the United States. However, analysts warn that these measures could raise costs for consumers and local manufacturers, given the insufficient domestic production of copper and the time needed to reactivate processing capacities.

This was warned by former Foreign Minister Hernán Felipe Errázuriz in an article in El Mercurio over the weekend: "It should be taken into account that the United States has a trade balance in its favor, that national competition with its industrial products is very low and that our main exports are copper and other metals, of which North America has a deficit. Imposing tariffs on them is irrational, it makes their manufactured products for domestic consumption and for the foreign market more expensive. Agricultural products and salmon could be the losers".

Jaime Troncoso R. Ex - Ante