Chile's Tough Tariff Dilemma

CHILE - In Brief 14 Aug 2026 by Robert Funk

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The Chilean political and business class is still digesting the United States’ decision to impose a 12.5% tariff on a large share of Chilean exports. While the country will certainly take an economic hit, the real question is political, as the move challenges several assumptions that have guided Chilean foreign policy for the past three decades: that Chile must open foreign markets via free trade agreements, that adhering to a rules-based system can provide some leverage with respect to larger economies, and that concentrating on competitive advantage can provide a solid base from which to grow. It should be noted that mining was not included in the items to be taxed, and indeed over half of Chilean exports to the United States remain tariff-free. While the US is not a huge destination for Chilean copper exports, some important products such as salmon, wine, fruit and fishmeal are subject to the new tariff, amounting to some 40% of exports. Salmon, agricultural products and food processing operate on considerably narrower margins than does copper mining. Antonio Walker, president of Chile’s National Agricultural Society, has pointed out that the new higher tariff would be devastating for businesses whose profitability may be around 8%. While Chilean wine and fishmeal represent a very small portion of exports to the United States, salmon exports alone have recently exceeded US$2.5 billion, while fruit shipments have been worth just under $1.5 billon. The ostensible justification for the new tariff is Chile’s lack of sufficiently strong mechanisms to block imports that may have been produced by forced labour. But the negotiations reveal that Washington’s interests extend...