The U.S. is threatening to slap steel tariffs on Brazil and Argentina. U.S. President Donald Trump said the two countries are manipulating their currencies and hurting American farmers.
However, the tariffs would widen a global trade war and punish a U.S. ally — Brazil’s new president. CGTN’s Joel Richards has details.
President Trump departed for the NATO summit in London on Monday, but not before taking to twitter to announce a new chapter in the on-going trade war. Trump stated the U.S. would be reinstating tariffs on steel and aluminum imports from Brazil and Argentina because of their currency devaluations.
“Well Brazil has really discounted, if you take a look at what’s happened with their currency, they’ve devalued their currency very substantially, by 10 percent,” Trump said. “Argentina also, and I gave them a big break on tariffs, but now I’m taking that break off, because it’s very unfair to our manufacturers and very unfair to our farmers. Our steel companies will be very happy and our farmers will be very happy with what I did.”
Both Argentina and Brazil were among the few countries to receive tariff exemptions on steel and aluminum imports to the US last year. In the case of Argentina, exports to the U.S. amounted to around $700 million in 2018. This decision is an about-turn in what appeared to be a strong relationship between the leaders. In Brazilian President Jair Bolsonaro, the U.S. president seemed to have found a kindred spirit.
“He has done a very outstanding job, ran one of the incredible campaigns, somebody said, it a little bit reminded people of our campaign which I’m honored by,” Trump said, following Bolsonaro’s victory.
Along with Argentine President Mauricio Macri, their personal relationship dates back decades, but now, that seems to have been forgotten.
Few observers have been suggesting that the Brazil real and the Argentine peso’s devaluation is the result of currency manipulation. Both Central Banks have stepped in to prop up the currencies this year, and most analysts agree the devaluation is the result of market forces, as both the South American economies are struggling.
But the peso and real devaluation has made these two agricultural power houses more competitive. In the context of the trade war, both Argentina and Brazil have stepped in to take the place of US farmers and export more goods to China.
Argentina and Brazil will seek to revert Trump’s decision over tariffs as their economies are in a not position to take further hits. Meanwhile President Trump has asked the Federal Reserve to take action against other countries that have devalued their currency.