(Bloomberg) — Copper traded on New York’s Comex slumped after Chilean Finance Minister Mario Marcel said the country will push for an exemption from a planned US tariff on the metal.
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The metal slipped as much as 6.2% to $5.4265 a pound before paring some of the losses. The US imports about half of its copper, with Chile the largest supplier.
The copper market is on edge as a self-imposed Aug. 1 tariff deadline by President Donald Trump approaches. The US leader surprised the market earlier this month by announcing a 50% levy on copper imports from the beginning of next month – much higher than analysts and market participants had anticipated. Details of the tariff, such as what form of physical copper will be subject to the duty, are still unclear.
Speaking in an interview with Radio Duna, Marcel said Chile would push for the exemption during trade talks in Washington on Monday, and he made reference to exemptions on certain raw materials in other agreements, such as UK steel. The minister vowed not to punish Chilean taxpayers by imposing any reciprocal tariff if the US proceeds with the 50% copper levy.
Chilean officials have pointed out that America’s reliance on imported copper leaves US manufacturing little immediate alternative than to pay the levy.
“What we hope is that these conversations that begin today in Washington also address the topic of copper,” Marcel said. “It wouldn’t be much use to have a trade agreement that excludes copper and timber, which make up more than half our exports to the US.”
Since Trump flagged copper tariffs in February by kicking off a national security investigation, prices of the metal in the US have surged above its international benchmarks. Such a large price differential has created a lucrative opportunity for traders and they’ve been rushing to ship the material to American soil to capture the profits.
The Aug. 1 deadline – which signals the endgame for the profitable trade – triggered a last-minute scramble in the copper market as ships are racing to the US to cash in. Copper prices in the US are still trading at a large premium to their counterparts on the London Metal Exchange, although they don’t fully reflect a 50% tariff rate. The premium stands at about 27% on Monday.
Comex copper fell 2.9% to settle at $5.6155 a pound at 1 p.m. in New York. Copper traded on the London Metal Exchange gained 0.2% to settle at $9,793 a ton.