Trump imposes duties on metals from Brazil and Argentina
The American President talks about the losses of American farmers from the monetary policy of these countries.
US President Donald Trump announced tariffs on US steel and aluminum imports from Brazil and Argentina, which shocked South American officials and made them respond to these challenges..
Trump tweeted that tariffs, «effective immediately», were necessary because «Brazil and Argentina have massively devalued their currencies, which is bad for our farmers».
In fact, the opposite is true: both countries are actively trying to strengthen their currencies against the dollar. Analysts say Trump’s decision may be due to the domestic political ramifications of his trade war with China.
American farmers are the target audience for Trump ahead of the November 2020 elections, and they see the trade war undermine the competitiveness of US agricultural produce, allowing their Brazilian and Argentine counterparts to get rich in the current situation..
«For many Brazilians, this smells like revenge for the benefit to soybean farmers – they have benefited immensely from the U.S.-China trade war by replacing U.S. soybean shipments to China.», – said Kim Catechis, head of investment strategy at Martin Currie.
U.S. Department of State and U.S. Trade Representative’s Office did not respond to a request for comment.
Brazilian President Jair Bolsonaro, a prominent Trump fanatic who has sought closer ties with the US, said he would call his US counterpart and seek to reverse the decisions..
«I don’t take it as retaliation, ”Bolsonaro said in an interview with Radio Itatiaia. – I will call him so that he does not punish us … and I am almost sure that he will listen to us».
Argentina’s Production Minister Dante Sica said Trump’s statement was «unexpected», and he is seeking talks with US officials. In addition, the Argentine Foreign Ministry announced that it would begin negotiations with the US State Department..
«We are trying to achieve greater accuracy (about the announcement) and what impact this can have, both commercially and administratively.», – said Sika.
Argentina’s Ministry of Manufacturing said the country exported about $ 520 million in steel and aluminum to the United States this year after exporting $ 700 million in 2018. The ministry added that it is working with Brazil to define a joint position and action plan..
Trump first announced tariffs on metals from Brazil and Argentina in March 2018, but they never went into effect.
Monica de Boll, senior fellow at the Peterson Institute for International Economics, believes Trump’s tweets were an attempt to pressure Brazil and Argentina to help him deal with China..
«In fact, he wants … I strongly suspect that “we need you to reduce agricultural exports to China”, because it really is what hurts farmers (USA)», – she said.
Trump’s accusation that the Brazilian and Argentine currencies were artificially devalued was met with skepticism.
Brazilian Central Bank Governor Roberto Campos Neto said the Brazilian real is floating and that the central bank is not aiming to maintain its value.
Campos Neto said in a speech in São Paulo that the recent downturn in the real market was due to disappointment at an oil auction that failed to attract large investors. Argentina introduced foreign exchange controls to stabilize the peso.
Trump also called on the Federal Reserve to cut interest rates so that countries «no longer used the power of our dollar. Rate cuts and easing – Fed!»
Trump has repeatedly called on the US central bank to cut rates to below zero, but Fed policymakers don’t want to. FRS holds regular meeting on December 10-11.
Otavio Barros, a spokesman for Bolsonaro, said without going into details that the Brazilian authorities would contact US officials to discuss currency issues..
Instituto Aco Brasil, the country’s chief steel lobbyist, said that «puzzled» by Trump’s decision. The statement says that the Brazilian government cannot intervene in the real situation, since the currency is in free circulation.
Trump Revives Steel Tariffs Against Brazil, Argentina
«The decision to tax Brazilian steel as a way to compensate an American farmer is a backlash against Brazil», – said in a statement. – This decision ultimately hurts the American steel industry itself, which needs semi-finished products exported by Brazil to power its steel mills».
American steelworkers rallied on Monday, while Brazilian steelworkers first fell but then recovered..