Oil at $100 and US tariffs collide in Chile's simultaneous stress test.

Brent crude touching one hundred dollars a barrel on the same day Washington confirmed a punitive 12.5% tariff on Chilean exports turned this Thursday into a simultaneous stress test for the Chilean economy: external pressure on two distinct fronts, at a moment when domestic growth was already stirring unease among analysts.

The exchange rate closed near 945 pesos per dollar, its highest level in roughly nine months, with a cumulative advance of more than eleven pesos over three sessions. The IPSA slipped to 10,931 points, dragged by the same storm that shook Wall Street, where Alphabet fell 7% and Tesla plunged 15% after disappointing earnings. The immediate catalyst was the intensification of the Middle East conflict: Houthi attacks on Saudi oil tankers in the Red Sea, Donald Trump's threats of a "greater military punishment" against Iran, and the effective closure of the Strait of Hormuz drove Brent to an intraday high of $101.91. Goldman Sachs estimates that crude could sustain an average of one hundred dollars next year if the Hormuz disruption persists, with upside potential toward $120 in the fourth quarter. For Chile, the equation is particularly hostile: expensive oil pressures inflation and the balance of payments, while copper — the peso's main anchor — fell 2.68% in Comex futures to $6.32 per pound, depriving the currency of its usual counterweight.

Against that backdrop came the confirmation Santiago had been dreading for weeks. The United States Trade Representative (USTR), Jamieson Greer, formalized a 12.5% tariff on Chilean exports under Section 301 of the Trade Act of 1974, invoking Chile's alleged failure to prohibit imports produced with forced labor. The measure takes effect this Friday, raising the levy from the transitional 10% that had prevailed through Thursday. A delegation headed by Foreign Minister Francisco Pérez Mackenna, with participation from Sofofa and other trade associations, had traveled to Washington without success to reverse it. The Undersecretariat for International Economic Relations rejected the measure sharply, noting that "the resolution does not maintain that Chile exports goods produced with forced labor, nor does it identify specific Chilean products under that condition." Business associations echoed the rejection. What is paradoxical — and what makes this decision especially hard to digest in Santiago — is that Chile was placed in the group with the highest tariff in the scheme, the same bracket applied to economies with notoriously weaker labor institutions, while Mexico, Canada, and the European Union, with partial regulatory frameworks, received only 10%. The measure also arrives at the worst possible cyclical moment: Santander this week cut its 2026 GDP projection to around 1%, a figure that reflects the structural stagnation that has been documented for several quarters.

On the domestic front, José Antonio Kast's government is navigating turbulence of its own. The removal of Undersecretary of Finance Juan Pablo Rodríguez, after he tested positive on a drug test in June — with the counter-sample still pending — brought to 32 the number of officials who have exited the administration in a little over four months. The interim role fell to Tomás Bunster Bustamante, coordinator of Economic Regulation and a trusted figure of Minister Jorge Quiroz. Beyond the personal episode, the incident adds to the earlier departures of the Minister of Public Security and the government spokesperson, cementing an image of institutional fragility that does not help investor confidence at a moment when the country needs precisely the opposite.

Minister Quiroz nonetheless had an active day on the legislative front. He announced a suppressive veto to strike from the reconstruction mega-reform the prohibition on anatocism — the charging of interest on interest — leaning on technical reports from the Central Bank and the Financial Market Commission, both opposed to the measure. "In the end it raises the cost of credit and distorts the financial market," Quiroz argued, noting that opposition to the rule spans from Communist Party advisors to the central bank. In parallel, the Chamber of Deputies passed the electricity tariff protection bill, which will regularize a $900 million debt accumulated over four years with power distributors, to be recovered through electricity bill charges between 2028 and 2035. The SII also extended tax relief for storm damage to 74 municipalities, concentrated mainly in the Valparaíso Region, allowing VAT to be declared and paid through October 30 without fines or interest. Damages from the frontal systems already reach $700 million according to Colliers, and the Superintendent of Sanitary Services warned that infrastructure investment standards will need to be reviewed and raised.

The medium-term outlook offers somewhat more relief. LarrainVial projects growth of 3.6% for 2027, with investment accelerating to 7% and more robust domestic demand. Services exports reached a historic record in 2025 at $3.19 billion, of which $1.106 billion corresponded to digital services, a data point that lends support to the employment tax credit included in the reconstruction law. The Central Bank, as the market anticipates, will hold the monetary policy rate unchanged at next week's meeting, a decision that appears entrenched given the inflationary context that one-hundred-dollar oil and a depreciated peso are already installing.

What will define the coming weeks is whether the Middle East escalation intensifies or is contained — Goldman Sachs is already talking about scenarios with Bab el-Mandeb and the Suez Canal disrupted simultaneously — whether Washington opens any negotiating channel on the forced-labor tariffs, and whether the government manages to stabilize its own institutional front before markets begin to punish political uncertainty more forcefully. The INE unemployment figure, expected next week, will arrive in a context where the March-May quarter already registered a 9.4% rate. A further increase would put still more pressure on a government that urgently needs news pointing in the opposite direction.

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