Trump's metals tariff tweet roils Brazil and Argentina

Cheryl Sanders
December 2, 2019

Earlier today Trump restored the tariffs on steel and aluminum from Brazil and Argentina. "I'm going to call him so that he doesn't penalize us. Brazil is making gesture after gesture to support the worldwide forums, but the not doing the same", Barbosa said.

"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", he said in another post.

The president also said that the Federal Reserve should lower rates in order to devalue the US dollar, which would make USA products more competitive on the global market place. "Lower Rates & Loosen - Fed!" he added.

Trump's trade war with China hurt USA farmers after Beijing retaliated when the president imposed levies on hundreds of billions of dollars of Chinese-made goods. Brazil and Argentina later secured "permanent exemptions" from the levies. A source familiar with Brasilia's reaction rejected the US claim of currency manipulation, noting the central bank was working to lift the real.

Both Brazil and Argentina were among a group of USA allies that Trump had exempted from steel and aluminum tariffs in March 2018.

Trump has repeatedly urged the Fed to lower rates to below zero, saying negative rates in Europe and elsewhere give those countries a competitive edge. The U.S. central bank's policymaking committee holds its next meeting on December 10 and 11.

"The decision to tax Brazilian steel as a way of "compensating" the American farmer is a retaliation against Brazil", it said.

In Brazil, stocks for steelmakers fell sharply as the market opened but quickly reversed their losses. Analysts from JP Morgan suggested buying the sector on any weakness, saying any tariff hike "should not be material" given their relatively small USA export volumes.

Tariffs against the countries were implemented in March 2018 but they were removed about five months later.

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