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International trade is constantly changing, with tariffs and sanctions impacting strategic sectors. The new US tariff policy on steel could directly affect Brazilian exporters, generating billion-dollar losses in the steel sector, but without a major impact on GDP growth.
The new tax on steel imposed by the United States should directly impact the Brazilian steel industry. The Institute of Applied Economic Research (Ipea) estimates that the sector will lose around US$ 1,5 billion in exports.
The measure is already in force and should reduce the prosdution Brazilian in almost 700 thousand tons.
Impact on the Brazilian steel market
The United States is the main destination for Brazilian steel. In 2024, more than half of the sector's exports went to the American market.
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The new taxation represents a challenge for the national industry, which is now looking for alternatives to minimize losses.
Fernando Ribeiro, coordinator of Ipea International Economic Relations, highlights the importance of the American market for Brazil.
According to him, it is essential that the country finds ways to negotiate the measure:
"This is because the United States is a very important market for Brazilian steel. In 2024, the last year we have data, they were the destination for more than half of exports. Therefore, it is a crucial steel market for Brazil and hence the importance of addressing this issue.“, says Ribeiro.
Attempt at negotiations
The Instituto Aço Brasil and Brazilian steelmakers hope that the Brazilian government will reach a new agreement with the US.
The entity reinforces the importance of reestablishing the import system negotiated in 2018, during Donald Trump's first government.
At the time, the two countries agreed on import quotas of 3,5 million tons of semi-finished products and 687 thousand tons of laminated products, without taxes.
With the new measure, all imports will be taxed at 25%.
Pressure from American industry
Resistance to reestablishing the agreement does not come only from the US government.
The CEOs of the three largest US steelmakers have urged Trump to keep the tariffs in place without concessions, saying the change in tariffs is necessary to ensure national security.
Pressure from American industry reinforces the challenge for Brazilian diplomacy in reversing the measure.
The government needs to find a way to dialogue with the US and defend the interests of the national steel sector.
Impact on the Brazilian economy
The Ipea study estimates that the new tax will reduce Brazilian steel production by 2,19%.
Furthermore, it could cause an 11,27% contraction in metal exports and a 1,09% reduction in imports.
However, the impact on Brazil's Gross Domestic Product (GDP) is expected to be small. According to Ribeiro, the estimated drop in GDP is just 0,01%, while total exports are expected to fall by 0,03%.
Despite its low impact on GDP, the measure worries the steel sector, which fears a broader retraction in the industry.
Consequences for the American market
Brazilian industry plays an important role in supplying steel to the United States.
In 2024, Brazil accounted for 60% of American mills' demand for steel plates, equivalent to 5,6 million tons.
The Brazilian Steel Institute warns that maintaining the new tax could also harm American industry. Without Brazilian slabs, U.S. steelmakers could face difficulties in maintaining production.
The expectation now is for the outcome of negotiations between the two governments and the impact of the measure in the coming months.
