U.S. President Donald Trump has tweeted that he will immediately restore tariffs on U.S. steel and aluminum imports from Brazil and Argentina, according to Reuters.
On Monday, Trump also urged the Federal Reserve to prevent countries from taking advantage of a strong dollar by devaluing their currencies, reports Reuters.
Both countries’ imports would get hit with 10% tariffs on aluminum and 25% tariffs on steel.
MetalMiner Expert Flash Analysis: Here’s the story behind the story
In terms of the currency angle, political turmoil has indeed devalued both Brazil’s real and Argentina’s peso in relation to the U.S. dollar, and whereas the degree of the impact is debatable, this storyline holds together, according to Don Hauser, VP of Strategic Advisory for MetalMiner.
“This tariff re-implementation does two political things — which are the real drivers of the story,” said Hauser. “First, it gives the impression of helping the [U.S.] farmers. While we battle China over trade — which is impacting the farmers — President Trump is doing everything he can to help them in every other place in the world. The second thing is helping the steel industry. In theory, and in public light, this will limit foreign steel entering the market, help drive prices up to a ‘sustainable margin,’ and comes at a time when mills are wrapping up their big annual contracts.
“States with both steel industry presence and farmers are a crucial part of Trump’s voter base,” Hauser continued. “It’s time to start pulling levers to solidify his voters as he heads into an election year. Trade has been the political weapon of choice for this administration and will likely continue.”
For details on which steelmakers would likely be most affected, or for further advisory, contact MetalMiner here.