Sao Paulo — The US should not treat steel products from Latin America as a problem to be solved, nor blame the region for global overcapacity, Latin American steel association Alacero said Thursday after US President Donald Trump signed a proclamation to impose a 25% tariff on steel imports.
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Instead, semi-finished steel from Latin American countries is a complementary trade to the US, Alacero said, adding that the US lacks self-sufficiency in this segment.
Brazil and Mexico exported around 4 million mt and 882,000 mt of semifinished products to the US last year, respectively, according to US Department of Commerce data. This represented around 60% of the US' total imports of semis, at 7.92 million mt.
Alacero said Trump's unilateral decision to impose national-security-based Section 232 tariffs could be against World Trade Organization rules.
"Everything indicates that it is an unsupported decision in national security, but [is aimed at] other objectives," Alacero said. Alacero also expressed concern over the impact on global trade. "What was previously exported to the US will seek other markets, such as Latin America," it said.
Given that likelihood, it said imports in the region should be monitored on a permanent basis, to measure the impact on markets.
If there is a negative impact, "the region must implement measures to detain such imports," it said.
Related feature: Trump's steel and aluminum import tariffs
BRAZIL'S STEELMAKERS TO SEEK EXEMPTION
Brazilian steelmakers are planning an immediate appeal with the US government, according to the country's steel institute, Aco Brasil.
Given the complementarity of its members' exports to the US, "Aco Brasil was expecting Brazil to be excluded from the measure, which did not occur," it said.
Tariffs on Brazil's steel exports to the US, "almost entirely made up of semi-finished products, which are reprocessed by the American steel industries -- will cause significant damage not only to [the Brazilian] companies, but also to those that do not have self-sufficiency in their supply," it said via email.
Aco Brasil added that the immediate problem to be analyzed with the Brazilian government was how its steel industry could defend itself against the worsening of the world situation in regards to the surplus of steel capacity of 750 million mt, "and now with the diversion of trade flow that the American decision will cause."
The US will implement a 25% tariff on imports of steel and a 10% tariff on imports of aluminum, which will take effect March 23.
Canada and Mexico will be excluded from the initial tariffs and the proclamations signed by Trump on Thursday include a broader that will allow other countries to request an exemption, a senior administration official said in a media briefing ahead of the signing.
Following a nine-month investigation into the effect of steel imports on national security, the Department of Commerce delivered its Section 232 report and recommendations to Trump on January 11.
A global tariff of at least 24% on all steel imports from all countries was one of three recommendations presented by Commerce in its report, however the administration decided to impose a tariff of 25% on steel based on additional data and analysis by Commerce following delivery of the initial report, the administration official said.
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