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Trump Says U.S. Will Impose Metal Tariffs on Brazil and Argentina Trump Says U.S. Will Impose Metal Tariffs on Brazil and Argentina
(about 3 hours later)
President Trump said on Monday that he would impose tariffs on steel and aluminum from Brazil and Argentina, widening a global trade war and hitting an ally, Brazil’s conservative president. WASHINGTON President Trump said on Monday that he would impose tariffs on steel and aluminum from Brazil and Argentina, a move that would shatter previous agreements struck with those countries and widen a global trade war.
Mr. Trump, in a message on Twitter, said what he called currency manipulation by Brazil and Argentina was hurting American farmers. “Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries.” Mr. Trump, in a message on Twitter, accused Brazil and Argentina of manipulating their currencies and hurting American farmers. “Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries.”
The Trump administration never imposed tariffs on Brazilian and Argentine metals, though it did force them to limit shipments to the United States under a quota system last year. The United States initially exempted Brazil and Argentina from the president’s sweeping metal tariffs in 2018, with the United States saying it would continue negotiations with those countries on a trade deal. The Trump administration never imposed tariffs on Brazilian and Argentine metals, though it did force them to limit shipments to the United States under a quota system last year. The United States initially exempted Brazil, Argentina and other countries from the president’s sweeping metal tariffs in March 2018, with the United States saying it would continue negotiations with those countries to improve their trade terms. In May 2018, the United States announced that it had reached an agreement with the countries that would cap their metal shipments at a specific volume each year.
It is unclear what prompted Mr. Trump’s message. But last week the Brazilian currency, the real, fell to a record low against the dollar after the country’s economic minister signaled that he was not concerned about exchange-rate fluctuations. It is unclear what prompted Mr. Trump to reverse those agreements. But last week the Brazilian currency, the real, fell to a record low against the dollar after the country’s economic minister signaled that he was not concerned about exchange-rate fluctuations.
Argentina’s peso has weakened with the country in the midst of an economic crisis.Argentina’s peso has weakened with the country in the midst of an economic crisis.
The surprise announcement on Monday was the latest escalation in the biggest global trade conflict in decades. Mr. Trump has also threatened new tariffs on products from China, Mexico, the European Union, Vietnam and elsewhere. Both economists and government officials have rejected the idea that Brazil and Argentina are manipulating their currencies. But those currency movements have made Brazilian and Argentine goods cheaper to purchase abroad, a dynamic that is particularly important for the agricultural sector and the U.S.-China trade war.
With next year’s election approaching, the Trump administration appeared to be working toward a resolution on several of these fronts. It has been trying to seal a first-phase trade deal with China, though the two sides are continuing to grapple over terms. And the administration has been pushing for Congress to approve its revision of the North American Free Trade Agreement, which would check off a major campaign promise for Mr. Trump. China is a major purchaser of American pork, soybeans and other agricultural goods. As the United States and China have slapped tariffs on each others’ products in a yearlong trade war, China has shifted to purchasing products from Brazil and Argentina instead, a move that has rankled Mr. Trump and other American officials.
“I gave them a big break on tariffs, but now I’m taking that break off because it’s very unfair to our manufacturers and very unfair to our farmers,” Mr. Trump told reporters on Monday. “Our steel companies will be very happy, and our farmers will be very happy.”
As of Monday morning, neither the Office of the United States Trade Representative nor the Commerce Department had issued the formal notices that would put tariffs on Brazil and Argentina into effect.
If they are imposed, the tariffs stand to do considerable damage to South America’s two biggest economies at a time when Argentina is in recession and Brazil confronts high unemployment and anemic growth.
Stocks fell in early trading after economic reports suggested that the American economy continues to face significant headwinds. The latest gauge of manufacturing activity from the Institute for Supply Management, a trade group, showed activity in the sector contracted for the fourth consecutive month in November.
The S&P 500 was down nearly 1 percent shortly after 11 a.m., putting the benchmark index on track for its worst day since Oct. 8. The trade-sensitive tech sector was the worst performing part of the index, falling about 1.7 percent.
The announcement appeared to take the Brazilian and Argentine governments by surprise.
“This was completely unexpected,” said Dante Sica, Argentina’s minister of production. “I was in Washington last week, and I talked to a lot of people, and there was no sign whatsoever that there would be any kind of change.”
Since he came into office in January, Brazil’s president, Jair Bolsonaro, has gone to great lengths to strengthen ties with the Trump administration, an effort that has yet to pay significant dividends. He too appeared to be caught off guard Monday morning when reporters asked him about Mr. Trump’s tweet.
“Aluminum?” Mr. Bolsonaro asked when reporters presents him with Mr. Trump’s tweet. “If that’s the case, I’ll call Trump. I have an open channel with him.”
Mr. Sica scoffed at the claim that Brazil and Argentina have been deliberately devaluing their currencies.
“Our currency has a flexible exchange rate and adapts itself to global changes,” he said.
Brad Setser, a senior fellow for international economics at the Council on Foreign Relations, said neither Brazil nor Argentina are manipulating their currency. He added that Argentina is in a “full blown” economic crisis and is close to running out of foreign exchange reserves, after selling foreign currency to try to support the value of the peso over the last year.
The announcement on Monday was the latest escalation in Mr. Trump’s global trade war. Mr. Trump has also threatened new tariffs on products from China, Mexico, the European Union, Vietnam and elsewhere.
With next year’s election approaching, the Trump administration appeared to be working toward a resolution on several of these fronts. It reached an agreement to lift metal tariffs on Canada and Mexico and declined to impose devastating car tariffs on the European Union. It has been trying to seal a first-phase trade deal with China, though the two sides are continuing to grapple over terms. And the administration has been pushing for Congress to approve its revision of the North American Free Trade Agreement, which would check off a major campaign promise for Mr. Trump.
But the tariffs on Brazil and Argentina suggest that Mr. Trump has not abandoned his confrontational approach.But the tariffs on Brazil and Argentina suggest that Mr. Trump has not abandoned his confrontational approach.
On Monday, he said on Twitter that American stock markets “are up as much as 21%” since he announced the metal tariffs on March 1, 2018, and that the United States was taking in “massive amounts of money” in tariff revenue. On Monday, he said on Twitter that American stock markets “are up as much as 21%” since he announced the metal tariffs on March 1, 2018, and that the United States was taking in “massive amounts of money” in tariff revenue.
The announcement also revived the threat of steel and aluminum tariffs in particular, which the administration has steadily rolled back over the last year as it reached settlements with Canada, Mexico and other countries. Any new tariffs would likely face legal challenges, however.
The president began placing stiff tariffs on global metals last year to stop what his administration contended was a flood of imported steel and aluminum that was threatening American producers and thus American national security. The idea has been disputed, with several countries bringing cases against the United States at the World Trade Organization. The president imposed the tariffs to stop a flood of imported steel and aluminum that his administration has claimed threatens American producers and thus American national security. The idea has been disputed, with several countries bringing cases against the United States at the World Trade Organization.
Tariffs have had limited benefits for the steel industry. Many American steel producers supported the tariffs and say they have provided some protection against cheaper metals imported from abroad. But other economic factors have proved more influential, including China’s large-scale production and a weakening manufacturing sector in the United States and abroad. And in a recent decision, the United States Court of International Trade, a federal court, ruled that Mr. Trump could not raise tariffs on steel exports from Turkey, because a 180-day deadline set for that decision had already elapsed.
Jennifer Hillman, a senior fellow for trade and international political economy at the Council on Foreign Relations, said the law that the president had used to issue the tariffs, Section 232 of the Trade Expansion Act of 1962, did not give him the authority to alter tariffs outside of certain time limits.
“Trump cannot legally convert the current quotas to tariffs,” she said. “Changing a quota to tariff more than a year and a half after the original action is outside those limits.”
Supporters of Mr. Trump’s tariffs say they have provided some protection against cheaper metals imported from abroad. But other economic factors have continued to weigh on the industry in the meantime, including China’s large-scale production and a weakening manufacturing sector in the United States and abroad.
The tariffs have also angered American manufacturers of automobiles, machinery, food packaging and other products, who must pay more for the metal they purchase.The tariffs have also angered American manufacturers of automobiles, machinery, food packaging and other products, who must pay more for the metal they purchase.
As of Monday morning, neither the Office of the United States Trade Representative nor the Commerce Department had issued the formal notices that would put tariffs on Brazil and Argentina into effect. The Brazil Steel Institute, which represents the interest of steel exporters, said it a statement that it found the new tariffs “perplexing” and warned that it would harm companies in both countries.
Both Argentina and Brazil have benefited from the president’s trade war with China, which has hurt American exports of soybeans and other products. “The decision will end up harming the American steel producing companies, which need the semifinished products exported by Brazil to operate its plants,” the institute said.
Brazil and Argentina have picked up much of that business, replacing the United States as a large purveyor of farm goods to China. Manuela Andreoni contributed reporting from Rio de Janeiro, Daniel Politi from Buenos Aires and Matt Phillips from New York.