U.S. President Donald Trump has announced through Twitter that he plans to introduce tariffs on steel coming from Brazil and Argentina, despite having spared the two countries when initially implementing the tariffs.
On 23 March of 2018, the U.S. implemented a 25% tariff on steel and a 10% tariff on aluminium shipped to the U.S., but exempted major trade partners like the European Union, Canada and Mexico, along with Brazil, Argentina, Australia and South Korea.
While several of these countries represent large trading blocs and could retaliate with tariffs of their own were Trump to not have exempted them, the only official explanation for why these countries were exempted came from U.S. Trade Representative Robert Lighthizer, who told the Senate Finance Committee that these countries would be temporarily exempt based on “a certain set of criteria,” though the specific criteria were not elaborated on.
While Trump has implemented these tariffs, at least to some degree, to help the struggling steel industry in the U.S., it does not appear his tariffs are having a long-lasting positive impact. Since last year, US Steel, the second-largest steel producer in the U.S., has reported a loss of $35 million this past quarter, its first loss since 2017. The largest steel producer in the U.S., Nucor Corporation, has seen its stock stay roughly the same from when the tariffs were introduced in 2018 to now, though it wasn’t without a lot of bumps along the way. The day before the tariffs were introduced, 22 March 2018, Nucor Corp stock was at 66.59 a share, and the day after, 23 March, it dropped to 59.44. Over the next year and a half, it fluctuated on a downward trend, dropping to as low as 46.95 in August, before rising again more recently to 55.28, where it sits as of 3 December 2019.
Specifically, Trump said via Twitter;
“Brazil and Argentina have been presiding over a massive devaluation of their currencies. which is not good for our farmers. Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries. The Federal … 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!”
It is unclear what Trump is referring to when he mentions that Brazil and Argentina are devaluing their currency. As the president does not provide any proof that that is the case, it appears that looking at some information shows that the governments of both Brazil and Argentina have not been actively working to devalue their own currency. Rather market forces, that to some degree are beyond the control of these countries, may have altered how much each countries currency is worth.
