Freeport’s U.S. Footprint Could Be a Hidden Asset in a Tariff War

SCCO may be world-class, but its geographical footprint could be a near-term weakness. Here's how to play the proposed copper tariffs.

Copper prices have soared, but looming tariffs have raised the stakes for foreign-sourced supply chains.
Southern Copper and Freeport-McMoRan remain industry leaders, but their geographic footprints tell different stories in a protectionist environment.
For investors navigating tariff uncertainty, Freeport's domestic production base may offer stronger insulation and a more compelling setup if trade tensions persist.

Copper is on a tear -- and Washington just raised the stakes. With the US preparing to impose steep tariffs on imported copper [1], the market is quickly changing from a supply-demand story into one increasingly driven by politics and policy.

And because more than half of America's copper needs [2] are met through imports, the stakes couldn't be higher.
This shift isn't just about higher prices. It's also about a shifting competitive landscape.

Producers that once relied on cost advantages could soon find themselves on the defensive, while US-based miners could move to the forefront. For investors, it's a moment to reassess which copper stocks deserve a place in the portfolio, and today we dig into that very question.

Trump Announcement

Copper powerhouse faces tariff turbulence
Southern Copper (SCCO) isn't just another mining stock -- it's one of the world's largest and most efficient producers of copper, operating a vertically integrated model with mines, smelters and refineries across Mexico and Peru.

Although the company has its headquarters in Arizona, it's majority-owned by Grupo M?xico, which controls [3] roughly 89% of the outstanding shares. This ownership structure brings both financial stability and governance complexity, placing long-term capital allocation firmly in the hands of its parent.
Unlike diversified miners that hedge exposure across multiple metals, Southern Copper is more of a pure play on the copper market [4].

That singular focus has become an important talking point in 2025, because the red metal has surged [5] by roughly 40% year-to-date, from £4.00 per pound in January to over £5.50 by midyear. The rally has been driven by a potent mix of global supply constraints, rising demand from green energy and data infrastructure, and the potential for new US tariffs, which are expected to put upward pressure [6] on domestic prices.
Yet despite copper's sharp rally, shares of Southern Copper haven't followed suit.

The stock trades around £100 per share, down roughly 10% over the past year and well below its 52-week high near £118. A mix of macro-driven equity volatility, an earnings miss earlier this year and lingering uncertainty about demand for copper has weighed on investor sentiment. One growing concern is the widening gap [7] between COMEX and LME copper prices.

COMEX (commodity exchanged) copper is priced in US dollars per pound, while LME (London metal exchange) copper is priced in US dollars per metric ton. The disparity in their prices could put pressure on Southern Copper's export competitiveness -- and by extension, its near-term profit margins.

Copper Prices

That concern is amplified by some stark geographical realities. While Southern Copper is US-listed and has its headquartered in the US, nearly all of its mining and refining operations are located abroad, leaving it directly exposed to the risk of US import tariffs.

If new duties are enacted on foreign-sourced copper, the company could face headwinds that more domestically anchored producers may be able to sidestep. The Trump administration has indicated [8] the copper tariffs will go into effect on Aug.

1 and could be as high as 50% -- a level that could materially affect the competitive dynamic in the sector.
Still, the company's operational foundation remains solid.

With over 550,000 metric tons of annual output, Southern Copper controls some of the lowest-cost, longest-lived copper reserves in the industry. Its vertically integrated supply chain enhances efficiency and supports strong margin capture, especially in high-price environments like the one unfolding now. Expansion projects underway in Mexico and Peru are set to increase production, reinforcing the company's role as a key supplier in an increasingly constrained global copper market.

Southern Copper is executing well. It'sgrowing earnings, managing costs and reinvesting with discipline. But in a market highly sensitive to trade policy and commodity pricing cycles, even strong results can be overshadowed by macro noise.

For now, the fundamentals remain sound. Whether the stock can catch up to copper's rally may depend less on execution and more on policy clarity and broader market sentiment.
Strong earnings and steady margins -- for now

Southern Copper started 2025 on solid footing, delivering a stronger-than-expected first quarter [9] that demonstrated its operational efficiency and financial resilience. The company reported revenue of £3.12 billion, up 20% year-over-year and beating estimates by nearly £180 million. Earnings per share (EPS) came in at £1.19, exceeding the £1.10 consensus by over 8%.

Net income climbed 29% from a year earlier to £946 million, while adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) rose 23% to £1.75 billion. These results reflect a well-run business benefiting from elevated copper prices and executing effectively despite the macro uncertainty.
Operationally, the company maintained copper output at 240,226 tons, with stronger production from the Toquepala and Buena Vista mines offsetting declines at La Caridad.

Output of molybdenum, a valuable (and sellable) mining byproduct, increased 9% increase, contributing to a meaningful reduction in costs. For the quarter, copper cash costs dropped to just £0.77 per pound, down 21% quarter over quarter. CFO Raul Jacob noted [10] that full-year costs are expected to remain in the £0.75-£0.80 range, assuming stable byproduct pricing, helping to preserve the company's enviable cost structure.

Despite the earnings beat, shares slipped in after-hours trading. The pullback appeared to reflect macro concerns more than company-specific issues, especially around global trade dynamics. Southern Copper exports a meaningful portion of its refined copper to the US, making it vulnerable to potential import tariffs.

With new duties now under consideration, management addressed the issue on the earnings call, saying the company could reassign production if needed and remains hopeful policymakers will back down from exorbitant tariffs. Still, tariff uncertainty remains a near-term overhang, particularly for a company whose realized pricing could be affected by widening spreads between COMEX and LME copper.
Looking forward, Southern Copper is investing aggressively in its future.

Capital expenditures totaled £721 million in Q1, up 9% year-over-year. The company is targeting £1.5 billion in capex for 2025, increasing to £2.3 billion in 2026 and £2.7 billion in 2027, as new projects, such as Tia Maria, Michiquillay and Los Chancas, advance through development. For Tia Maria alone, 2025 spending is projected at £200 million.

Management emphasized that community support for the new mines remains strong, and engagement efforts are continuing to help ensure seamless execution in sensitive regions.
While those developments are promising, Southern Copper's heavy reliance on exports to the US clouds its near-term outlook. If tariffs are enacted and the company can't redirect enough shipments to alternative end-markets, it could face downward revisions to future financial guidance.

Management has expressed confidence in its ability to adapt, but until trade-related uncertainty clears, the market may continue to view this exposure as a bearish headwind.

Recent Performance

Stretched valuation and a tariff wildcard
Southern Copper continues to execute well operationally, but its valuation leaves little margin for error. The stock currently trades around £10 per share, roughly 10% above the average analyst price target of £93 and just below its 52-week high near £118.

While elevated copper prices may justify some of the premium, the stock's valuation still appears rich relative to its near-term risk profile.
That concern becomes more evident when you dig into the underlying multiples. The company's trailing P/E (price-to-earnings) ratio [11] of 22 may seem reasonable at first glance, sitting just below the sector median of 24.5.

But look deeper and the story becomes more lopsided: Southern Copper trades at a price-to-sales ratio of 6.6, nearly five times the industry average of 1.4, and a price-to-book ratio of 8.7, which dwarfs the sector norm of 1.8. These multiples are rare in the commodity universe and are often reserved for companies with either outsized growth or diversified revenue streams -- neither of which apply in this instance.
That valuation premium likely helps explain why the stock failed to rally after its recent earnings beat.

Despite solid margin performance and better-than-expected results, investors seemed more focused on broader macro risks, particularly the rising likelihood of US import tariffs on refined copper. Given that Southern Copper exports a significant share of its production to the United States, any trade restrictions could compress margins or disrupt logistics, posing a real threat to future guidance.
Analysts seem to share that caution.

Of the 19 covering [12] the stock, only three rate it a "buy" or "overweight," while 10 have it at "hold" and six recommend "sell" or "underweight." That distribution highlights the growing disconnect between bullish copper sentiment and a stock that's struggling to justify its premium.
If tariffs don't materialize and copper prices stay elevated, Southern Copper has the potential to perform well. But in the near term, the risk-reward profile feels unbalanced, particularly for investors who prefer names with more valuation cushion and less policy uncertainty.

Trump Tariffs

Freeport's domestic advantage

If Southern Copper faces policy-related headwinds, Freeport-McMoRan (FCX) may be positioned to benefit from the same developments. As the risk of tariffs clouds the outlook for import-reliant producers, Freeport's US footprint could prove to be a strategic advantage. The company is the largest [13] copper producer in the United States, with roughly 35%-40% of its output coming from domestic mines, including Morenci, Bagdad and Safford in Arizona, providing a critical layer of insulation from potential import duties.

If recent history is any guide, tariffs tend to benefit domestic producers and their stock prices. After similar protectionist measures were imposed [14] on steel (with a 50% tariff effective June 4), US-based companies like Reliance Steel (RS), Steel Dynamics (STLD) and Nucor (NUE) saw their shares respond positively -- all three are up 20% or more year-to-date. If copper tariffs follow a similar path, Freeport could see both fundamental gains and sentiment-driven upside.

That policy tailwind could hit just as Freeport is picking up operational steam. In Q1, the company delivered [15] £5.7 billion in revenue and £0.24 in EPS, beating expectations despite lower copper volume year-over-year. Realized copper prices rose to £4.44 per pound, while net cash costs improved to £2.07.

Management sees that figure dropping to £1.50 for the full year, thanks to byproduct credits and strong metals pricing.
On the production side, Freeport is guiding for 4 billion pounds of copper in 2025, with US operations accounting for a meaningful share. The company is also nearing completion of a major smelter upgrade in Indonesia, expected to drive incremental revenue starting in 2026.

Operating cash flow exceeded £1.1 billion in Q1, and Freeport repurchased £80 million in stock under its £5 billion buyback program, highlighting capital discipline alongside continued investment in organic growth.
Despite trading at a premium, Freeport's valuation reflects a mix of near-term strength and long-term potential. The stock trades at a P/E of 38 [16], above the sector median of 25, with a price-to-sales ratio of 2.7 and a price-to-book of 3.8.

While those multiples aren't cheap, they appear justified by Freeport's US production advantage, consistent execution and potential upside from tariff-related tailwinds. Its stock trades around £46 per share, below the average analyst price target of £51, and it enjoys solid support on Wall Street with 16 of 23 analysts rating [17] it a "buy" or "overweight."
Bottom line: If copper tariffs take effect, Southern Copper's margins could face pressure, even amid rising copper prices.

By contrast, Freeport-McMoRan appears well-positioned to benefit from stronger realized pricing and a potential shift in investor focus toward US-based producers. For those looking to hedge geopolitical risk or broaden their copper exposure, Freeport offers a compelling and arguably superior value proposition.

Recent Performance

Investment takeaways
Southern Copper remains one of the most efficient copper producers in the world, with vertically integrated operations, low cash costs, and deep reserves in Mexico and Peru.

For long-term investors seeking exposure to structural demand trends -- from electrification to infrastructure to AI-driven data buildouts -- the company offers clear appeal. Its balance sheet is strong, its cost discipline is well-established and its growth pipeline is intact.
But in today's macro environment, those strengths come with meaningful risks.

Southern Copper exports a large share of its refined copper to the United States, leaving it directly exposed to proposed import tariffs. While copper prices have surged in 2025, the stock's elevated valuation and foreign production footprint make it vulnerable if trade tensions escalate or margins begin to narrow. Analyst sentiment remains cautious, and with the stock already trading above the average price target, near-term upside looks constrained unless tariff headwinds ease.

Freeport-McMoRan, by contrast, sources roughly 35%-40% of its copper output from US operations, potentially giving it a strategic edge if tariffs are enacted. Domestic producers have historically benefited from protectionist measures; recent steel tariffs, for instance, boosted prices and stock performance for US-based firms. If copper takes a similar route, Freeport may stand to gain.

At the same time, investors should remain alert to the broader implications -- rising input costs could fuel inflationary pressures across the industrial economy [18], adding complexity to an already uncertain macro landscape.

Author: Andrew Prochnow Bio: Andrew Prochnow, a frequent contributor to Luckbox, has more than 15 years' experience trading the global financial markets, including 10 years as a professional options trader.ADD after bio: For daily financial market news and commentary, visit the News & Insights page at tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.

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References

^ imported copper (luckboxmagazine.com)
^ copper needs (www.ft.com)
^ controls (en.wikipedia.org)
^ copper market (luckboxmagazine.com)
^ surged (tradingeconomics.com)
^ upward pressure (www.reuters.com)
^ widening gap (www.argusmedia.com)
^ indicated (www.cnbc.com)
^ first quarter (www.investing.com)
^ noted (finance.yahoo.com)
^ trailing P/E (price-to-earnings) ratio (seekingalpha.com)
^ covering (www.wsj.com)
^ largest (discoveryalert.com.au)
^ imposed (www.whitehouse.gov)
^ delivered (s22.q4cdn.com)
^ P/E of 38 (seekingalpha.com)
^ rating (www.wsj.com)
^ industrial economy (www.investopedia.com)