President Trump unexpectedly announced via Twitter on Monday, December 02, 2019 that the 25% Section 232 steel and aluminum tariffs that were enforced globally in 2018 would be reinstated on imports from Argentina and Brazil, claiming that a “massive devaluation” of the countries’ currencies has given them an unfair trade advantage. Like Canada and Mexico, Argentina and Brazil had previously achieved a temporary exemption from the steel and aluminum tariffs after negotiating a deal with the United States. The application of Section 232 tariffs on national security grounds is currently being contested at the World Trade Organization (WTO) and also faces legal challenges in the U.S. As of the time of this post’s publication, an official announcement from the White House has not yet been released, but more can be read about the tariffs here.
Brazilian steel and aluminum exports account for approximately 9% of total exports to the U.S. and the Brazilian real has depreciated against the dollar significantly over the last two years due to a series of interest rate cuts. The Argentine peso has lost approximately 60% of its value against the dollar in 2019 due to capital flight, however, exports of steel and aluminum only account for approximately 3% of its total exports to the U.S. As a result, the impact of these increases may not be known for a while. Additionally, there is the concern as to whether this unanticipated increase is an overreach of presidential authority given the recent decision by the Court of International Trade.
We will continue to monitor this situation and will provide future updates as additional details become available. In the meantime, please contact Husch Blackwell’s International Trade and Supply Chain team for more information.