Trump’s 25% tariff on steel and aluminum imports may significantly impact Brazil, leading to potential job losses and falling prices in the steel sector. Experts foresee adverse effects on the market, though some local benefits may arise from reduced steel prices. The full extent of the economic implications remains to be seen.
President Donald Trump’s 25% tariff on steel and aluminum imports is poised to affect Brazil significantly, as it stands as the second-largest exporter of steel to the US, contributing about 18% of US imports. The full impact of this tariff remains uncertain and depends on how the market responds to the changes, which experts predict may lead to lower prices and heightened unemployment in the Brazilian steel sector.
Economist Weslley Cantelmo noted that similar tariffs were enacted during Trump’s previous term. Although those measures evolved to include quotas that affected Brazil, the current context could still lead to job losses in key steel-producing states like Rio de Janeiro and Minas Gerais.
The tariff aims to decrease US imports; thus, foreign metals will see price increases, according to Williams Gonçalves from UERJ. The potential reduction in US demand could create surplus steel internationally, leading to lower global prices, which could adversely affect Brazilian producers.
Diana Chaib from Cedeplar/UFMG highlighted that Brazilian steel typically bound for the US may not find a robust market elsewhere, further stressing local steelmakers. The decrease in US demand for steel is anticipated to impact jobs significantly in Brazil’s vital steel industry.
While the tariff’s impact is expected to result in downsizing and job losses in the steel industry, Mauricio Weiss emphasized that it might not drastically alter Brazil’s overall GDP. The steel sector, representing about 2% of GDP, primarily caters to local needs, indicating that while local employment may be impacted, broader economic stability might be retained.
Notably, the potential reduction in steel prices in Brazil could benefit local industries, particularly civil construction and shipbuilding, as outlined by economist Pedro Faria. This could alleviate some economic pressures domestically despite the adverse effects on the steel sector.
In the US, Cantelmo suggested that the nation’s ability to rely solely on domestic steel production is questionable. With imports supplying approximately 25% of US steel demand, prices for steel may spike if domestic production cannot meet this need, thereby exacerbating inflation, which would have further implications for the US and Brazilian economies.
Trump’s tariffs are likely to negatively impact Brazil’s steel industry through reduced exports and potential job losses, particularly in steel-producing regions. While the change could lower steel prices domestically, thus benefiting certain local sectors, the overall effects seem concentrated in the steel market. Additionally, the possible inflationary pressures in the US may have ripple effects on the global economy.
Original Source: www.brasildefato.com.br
