President Donald Trump on Monday tweeted that he was bringing back tariffs on Brazilian and Argentina steel as a key deadline for imposing more levies on China approaches.
“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,” Trump said.
Brazil and Argentina both received exemptions from the 25% steel tariffs and 10% aluminum tariffs in May 2018.
The real BRLUSD, +0.4335% has dropped 8% this year, and the Argentine peso ARSUSD, -0.098280% has plunged 37% as that country’s economy has imploded.
Analysts at ING say it’s been market forces, and not the Brazilian or Argentina government, responsible for the currency declines. “Argentina, for example, is facing yet another debt problem, which has been scaring international investors away. In Brazil, the central bank has actually been intervening to fight the depreciation of the real,” the ING analysts said in a note to investors.
Trump’s move on steel tariffs comes as the U.S. and China are having troubling finalizing a so-called phase one trade deal. China has called for the removal of U.S. tariffs on Chinese goods, as a Dec. 15 deadline for an extra 15% tariffs on products is set for imposition.
Trump, as he has previously done, also called for the Fed to cut interest rates to weaken the dollar. The Fed has cut interest rates three times in 2019.
U.S. stock futures moved off their highest levels of the day and European stocks flattened out after President Trump tweeted. U.S. stocks fell on Monday, hit by the tariff news as well as a manufacturing survey declining in November.
The Dow Jones Industrial Average DJIA, -0.62% has climbed about 14% since March 1, 2018, while the S&P 500 SPX, -0.77% is up around 17% over the same stretch.
Source: Read Full Article