Trump tweet threatens steel, aluminum tariffs on Brazil, Argentina

In another twist to the ongoing trade war, Trump threatens to slap Brazil and Argentina with steel and aluminum tariffs in a tweet Monday morning. Getty Images

December has rolled in with a fresh twist to the on-going trade war for the U.S. steel market.

In the wee morning hours Monday, President Donald Trump once again took to Twitter to announce his administration will “restore” 25 percent steel and 10 percent aluminum tariffs against Brazil and Argentina for what it considers to be currency manipulation.

Trump also demanded that the Federal Reserve lower interest rates to prevent other countries from taking advantage of the strong U.S. dollar.

.....Reserve should likewise act so that countries, of which there are many, no longer take advantage of our strong dollar by further devaluing their currencies. This makes it very hard for our manufactures & farmers to fairly export their goods. Lower Rates & Loosen - Fed!

— Donald J. Trump (@realDonaldTrump) December 2, 2019

While Argentina doesn’t account for much exported steel to the U.S., Brazil is major player in the market.

According to Steel Market Update, Brazil has accounted for an annual average of around 4.8 million tons of exported steel to the U.S. between 2014 and September 2019. Most of that come from slabs, billets, and blooms of semi-finished steel. Argentina, on the other hand, only exported a little more than 186,000 tons of steel to the U.S. in 2018, which was mostly oil country tubular goods (OCTG).

Of course, at this point, Trump’s Tweet can only be classified as a threat and doesn’t hold any water under the law.

"It remains to be seen exactly what the consequences will be," Steel Market Update CEO John Packard said in an email.

But if the Section 232 tariffs go into place, here is what Packard says could happen:

“It will tighten supply and create an environment to support higher steel prices. The steel mills who buy slabs from Brazil are going to potentially have some short term (Q1) supply issues. Those companies who are buying galvanized or Galvalume from Brazil may have to find new sources of supply, probably at much higher pricing.”

There also is a discrepancy over Trump saying he will “restore the tariffs.”

According to an SMU source, trade attorney Lewis Leibowitz, the steel tariff threatened against Brazil and Argentina cannot be technically “restored” since neither country had a 25 percent tariff implemented against them in the first place.

When the steel and aluminum tariffs were first rolled out in Spring of 2018, Brazil and Argentina were two of three countries (South Korea being the other) to negotiate a quota in place of a tariff.