President Donald Trump is cutting the cap on allowable steel shipments from Brazil, citing a slump in the U.S. market.
In a proclamation issued late Friday, Trump amended a previous decision under the so-called Section 232 national security powers to lower the cap on allowable imports. The limits were set in 2018 as part of a deal between the nations to avoid tariffs that Trump applied to other countries.
Trump cited a slumping American steel market, which has only accelerated amid shutdowns spurred by the coronavirus pandemic.
“Imports from most countries have declined this year in a manner commensurate with this contraction, whereas imports from Brazil have decreased only slightly,” he said in the proclamation.
For the remainder of 2020, the U.S. will lower the cap “applicable to certain steel articles imported from Brazil,” according to the proclamation, which didn’t specify which ones. The U.S. will also allow exemptions in certain cases. The new limits come after talks with Brazil, which faced the threat of a 25% tariff.
“The United States and Brazil will hold further consultations in December 2020 to discuss the state of the steel trade between the two countries in light of then-prevailing market conditions,” Trump said. Brazil’s annual cap will revert to its previous level in 2021 “unless that limit is further modified or terminated,” he said.
Domestic benchmark steel prices are down 12% this year as the global virus outbreak crushed demand for the commodity used in products ranging from appliances to automobiles and in the construction industry. American steel executives said this week at one of the industry’s largest conferences in North America that a recovery to pre-pandemic levels is still probably a year or two off.
Brazil’s foreign ministry, while recognizing the U.S. decision, said in a statement Saturday that it expects the U.S. steel industry to recover, and for trade in semi-processed steel to return to previous levels or even grow.
Source: Yahoo Finance