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High Tariffs in the United States, Record Imports, and High Idleness in the Brazilian Industrial Park Place Steelmaking Under Strong Pressure in 2025, While Executives and Government Seek Survival Strategies During a Conference in São Paulo.
The imposition of 50% tariffs by the United States on steel and aluminum, combined with the increase of 6.3 million tons in annualized import rates and 35% idleness in mills, pushes Brazilian steelmaking to a critical point.
The alert came just before one of the sector’s main conferences in São Paulo, where executives discuss measures to contain losses and preserve competitiveness, according to Bloomberg Línea.
Tariffs in the USA Increase Pressure on Brazilian Steel
The escalation of U.S. tariffs was formalized under Section 232 of the Trade Expansion Act of 1962, which authorizes measures when imports are deemed a risk to national security.
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Brazil stood still: while global GDP per capita soared 675% since 1980, the country grew only 428%, lost ground since 2015, and today could have 42% higher income, with an additional US$ 13.4 thousand per inhabitant.
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Selic at 14.5% starts a new economic cycle in Brazil with a direct impact on investments, inflation under pressure, rising oil prices, and strategic changes in portfolios.
In practice, the tariff on imported steel and aluminum rose to 50% starting in June.
Additionally, the White House issued, at the end of July, a specific act for Brazilian products, creating a broad ad valorem addition.
For goods already covered by Section 232, such as steel, the sectoral rule prevails.
The result is a significant increase in access costs to the U.S. market and a forced redesign of trade routes. Meanwhile, the volume of foreign steel entering Brazil remains high.
The sector’s view is that aggressive prices — often below domestic levels — pressure margins and dislocate national production, raising a warning sign about the sustainability of the industrial park, according to Bloomberg Línea.
Record Imports Challenge the Domestic Market
The chairman of the Gerdau board, André Gerdau Johannpeter, summarized the situation: “This may be the most tumultuous year” for the industry, he said, citing “geopolitical conflicts, trade wars, and a lot of uncertainty in the air.”
According to the executive, steelmaking operates with a record annual import rate of 6.3 million tons, a level he noted is higher than Gerdau’s own production volume.
The combination of exchange rates, irregular global demand, and excess supply in Asian markets fuels this flow.
With imported steel taking up more space, local producers have reduced prices to try to preserve their market share.
The association of flat steel distributors reports that margins have “practically disappeared” in some segments.
This movement reflects a more intense competition between distributors and mills and the need to deplete stocks, according to Bloomberg Línea.
Idleness of Mills Reaches 35%
Idleness — the difference between installed capacity and what is effectively produced — has increased to 35%, above the range considered healthy for the sector, between 15% and 20%.
For a capital-intensive industry with long-term investments, this mismatch undermines profitability and discourages new investments.
Johannpeter assessed that any further deterioration would make the business “unviable” in some plants.
In addition to the immediate pressure on cash flow and results, prolonged high idleness usually leads to postponed maintenance, reduced shifts, and renegotiation with suppliers.
This cycle creates a cascading effect throughout the entire production chain.
On the other hand, reducing installed capacity is a difficult decision: it requires disarmament schedules, involves labor contracts, and may compromise the ability to respond when demand returns.
Conference in São Paulo Exposes Urgency of the Crisis
The diagnosis of “tightrope” gained prominence because it emerges precisely during one of the most important meetings in the steelmaking calendar in São Paulo.
There, representatives of mills, distributors, and government discuss measures for trade defense, tax adjustments, and instruments to neutralize competitive distortions.
The agenda includes improving import monitoring, reviewing ex-tariffs, and applying safeguards more swiftly when warranted.
Although Brazil maintains dialogue with partners to mitigate the impacts of tariffs, the market operates under the assumption of a longer period of trade volatility.
In this interim, companies tend to strengthen their focus on higher value-added niches, long-term contracts, and integration with domestic customers as a way to cushion external shocks.
Strategy Impacted by American Tariffs
In the United States, the increase in tariffs under Section 232 directly affects Brazilian shipments of semi-finished goods — a relevant product in Brazil’s export agenda to that market.
Even with possible regulatory exceptions, the 50% tariff raises the price floor for the importer and narrows margins.
Some contracts may be renegotiated or redirected to other destinations, but this reallocation does not occur without logistical and commercial costs, nor at the same pace as regulatory changes.
For Brazil, external pressure coincides with apparent consumption that does not accelerate in the same proportion as import increases.
In 2024, the country had already recorded a record of external purchases of steel products.
In 2025, the accumulated pace until mid-year remained strong, reinforcing the imbalance between local supply and imported competition.
Vectors Influencing Prices and Demand
In the short term, three vectors shape the price curve: international parity, U.S. tariff policy, and exchange rates.
If the U.S. dollar remains strong, imported steel loses some attractiveness, but this effect can be neutralized by additional discounts from the exporter or by global oversupply.
In turn, the dynamics of tariffs tend to recalibrate arbitrage between markets. The higher the entry cost to the U.S., the greater the chance of redirected surpluses to other countries, including Brazil.
In this environment, the typical defensive strategy involves calibrating production mix, intensifying efficiency programs, and renegotiating timelines with the supply chain.
There is also increasing demand for trade defense measures that curb proven unfair practices without distorting legitimate competition.
Sector Seeks Measures Against Imbalances
The reports from distributors about compressed margins and the deterioration of the idleness indicator indicate that the stress is not limited to one company or region.
In addition to the tariff shock, the discussion in Congress on the sector involves issues such as state incentives for imports, licensing timelines, and the processing of anti-dumping investigations.
There is also the challenge of maintaining investments in decarbonization and technology at a time when cash generation is under pressure.
Despite the adverse situation, Brazil retains structural advantages, such as the availability of iron ore, an industrial park with large installed capacity, and proximity to Latin American markets.
The central issue, according to executives, is to get through the turbulence period without permanent capacity destruction and preserving competitiveness for the next cycle.
As conversations advance, the sector awaits signs of stabilization in international trade and domestic responses that reduce asymmetry against imported products.
With heavier external tariffs, elevated import rates, and 35% idleness, what should be the immediate priority to prevent parts of the steelmaking park from permanently shutting down?
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