US president Donald Trump just slapped tariffs on Brazil and Argentina to try and dig himself out of a problem he created
- US president Donald Trump announced on Monday that he's imposing new steel and aluminum tariffs on Brazil and Argentina.
- It's a stunning move that opens new fronts and widens his global trade war into two of the largest economies in South America.
- In a tweet, Trump blamed both nations for devaluing their currencies and hurting American farmers in the process.
- Economists, though, reject the idea that Argentina and Brazil have tried artificially weakening their currency.
- Some have said the President Trump is trying to dig himself out of a hole in the trade war with China instead, seeking to pressure Buenos Aires and Brasilia into limiting their cooperation with Beijing as it buys more of their goods.
- Visit Business Insider's homepage for more stories.
President Trump announced on Monday that he's imposing new steel and aluminum tariffs on Brazil and Argentina. It's a stunning move that opens new fronts and widens his global trade war into two of the largest economies in South America.
In a tweet, Trump blamed both nations for devaluing their currencies, and hurting American farmers in the process.
Brazil and Argentina have been presiding over a massive devaluation of their currencies. which is not good for our farmers. Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries. The Federal....— Donald J. Trump (@realDonaldTrump) December 2, 2019
Weaker currencies would make Argentine and Brazilian goods cheaper on international markets compared to US farm goods.
Economists, though, reject the idea that Argentina and Brazil have tried artificially weakening their currency. And they weren't highlighted on an annual Treasury Department report released in May which officially designates nations as currency manipulators.
Some have said the President Trump is trying to dig himself out of a hole in the trade war with China instead, seeking to pressure Buenos Aires and Brasilia into limiting their cooperation with Beijing as it buys more of their goods.
"I don't think this has a whole lot to do with steel; this is a China issue," Fernando Cutz, a Western Hemisphere expert at The Cohen Group, told the Washington Post. "If USTR wants to maximize a trade deal with China, they need to put pressure on China. But if China figures out how to replace the U.S. markets with Brazil and Argentina, that's not creating pressure."
As China rolled back purchases of US agricultural products over the past year, they've bought more pork, soybeans, and more goods from other countries.
Brazil has been a big winner from the trade war, particularly its soybean farmers. According to a US Department of Agriculture released earlier this year, Brazil's share of the Chinese soybean market surged to 77% in a period ending this February.
That's in stark contrast to the United States, which which saw its portion of the market plummet to 4% this year from around 30% in 2018.
Back in September, Argentina inked a deal with China allowing its farmers to export soymeal starting next year, a decision Beijing had long balked at even as it was the top of purchaser of Argentine soybeans, Reuters reported.
The loss of export markets creates significant hurdles for US farmers trying to re-enter them, according to Matt McAlvanah, the spokesperson for Farmers for Free Trade, a pro-trade advocacy group.
McAlvanah previously told Business Insider: "It's very difficult to regain markets farmers have spent decades cultivating. These relationships are built over time, they're built on trust - and when they go away overnight, they don't come back overnight."
Receive a daily update with all our latest news: click here.
Also from Business Insider South Africa:
- Engen is now the 'exclusive ClubCard fuel partner' after Clicks and Shell's abrupt divorce
- Checkers is testing a 1-hour-delivery online shopping service in Sandton and Cape Town – and for now it is free
- TAKE A LOOK: Inside South Africa's biggest mall, where kids have their own cinema with a giant tube slide inside
- Blueberries are now being harvested in the Limpopo bush – and exported across the world
- This aerial photo shows how much of Saxonwold the Guptas owned
- We tried Ricoffy’s new iced coffee – and even the coffee snobs liked it
- Sales of Beacon chocolate shot up thanks to new wrappers