President Donald Trump recently announced that he will reimpose tariffs on any steel and aluminum imports from Brazil and Argentina.
The reasoning for the tariffs comes from claims that the two countries have been devaluing their currencies.
“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,” tweeted Trump.
However, the specifics of the tariffs have yet to be released by the Trump Administration. Earlier, the Trump Administration had granted waivers on the 25% on steel tariff and the 10% on aluminum tariff.
The weakening currencies in both Argentina and Brazil make their crops more competitive than those grown by American farmers. Additionally, the current trade war with China has also hit American farmers hard. Since the Chinese government has enforced less purchasing of American farm goods, Brazil’s farm goods have partially filled that gap.
Economists are also skeptical that the two countries are purposely weakening their currencies.
“Brazil has had a free-floating currency for a long time now and that isn’t changing. The real is weakening because interest rates are going down and the dollar is strengthening against emerging-market currencies,” said economist Carlos Kawall, chief researcher at ASA Bank in São Paulo.