New US tariffs on aluminum and steel
by David Fleschen
US President Trump yesterday announced surprisingly via Twitter, to introduce with immediate effect again aluminum and steel tariffs against Argentina and Brazil. These were introduced by Trump in a sweeping deal in March 2018 (10% on aluminum, 25% on steel), later transferred to a quota system and lifted in the spring of this year. Trump yesterday cited the devaluation of the two countries' currencies, which would penalize US farmers. Like the US, Brazil and Argentina are major exporters of agricultural products. In the case of aluminum, the US import tariffs should not have much impact. According to data from the World Bureau of Metal Statistics, the USA only covers a good 4% of its aluminum imports from Argentina and even only 0.2% from Brazil. For Argentina, however, the US is an important buyer, but for Brazil, they hardly play a role. In the case of steel, a slightly different picture emerges. Argentina also plays a minor role here (0.6% of US steel imports so far this year according to data from the US Statistics Department), Brazil, however, is already heavyweight. From January to October, the US bought 3.8 million tons of steel in Brazil, which equals 17% of its imports. Brazil is thus behind Canada the most important steel supplier in the USA. And for Brazil, the US is an important buyer: Steel and iron exports to the US are in second place behind oil. However, we do not expect US tariffs against Argentina and Brazil to have any major impact on the world market, neither in aluminum nor in steel. The quantities are too small for that.
Source: Commerzbank Research, Photo: Fotolia