Brazil is expected to propose trade quotas as an alternative to the 25% tariffs imposed by the United States on steel and aluminum, according to Vice President Geraldo Alckmin.
The government of President Luiz Inácio Lula da Silva has not yet discussed the matter with the Trump administration since the US leader announced the 25% tariffs on all metal imports on February 11. However, quotas that limit the amount of steel Brazil can export to the US each year have proven to be a “good solution” in previous trade disputes and may be on the table again, Alckmin told reporters in Brasília.
This will not be the first time the two countries negotiate on the subject. After Trump imposed similar tariffs during his first term, the US and Brazil agreed on export quotas of 3.5 million tons of plates and semi-finished products and 687,000 tons of flat-rolled products. Trump eventually granted exemptions from the tariffs to Brazil and other countries.
Therefore, Brazilian companies were already subject to annual import quotas by the US. In fact, only 18% of products destined for the US pay the full 25% tariff.
Brazil is the third-largest supplier of steel to the US, according to the U.S. Census Bureau. The institute Aço Brasil, which represents Brazilian steelmakers, said it hopes the governments will reach an agreement similar to that of Trump’s first term.
Sources: Reuters and Bloomberg