Yesterday new tariffs were announced unexpectedly when President Trump declared there would be new tariffs on all steel and aluminum imports from Brazil and Argentina. This opens up a new front in an ongoing global trade war, as previously both countries had been mostly excepted from the imposition of worldwide section 232 tariffs on metals that were put in place last year.

Both Argentina and Brazil had agreed to a quota system for their metals exports, and have thereby been largely able to limit their exposure to punitive duties in the USA but also limited in their abilities to export. Argentina has a relatively small amount of product going to the USA, but Brazil’s robust steel industry made up more than 10% of the US’ total imports.

The reasoning behind the imposition was given that both countries are unfairly manipulating their currency which leads to an unfair advantage on the global markets for their agricultural products, hurting US farmers. Argentina and Brazil are both major producers of products like soybeans and have ramped up their exports to China while US farmers have been cut out of Chinese markets due to the ongoing trade war with China.

Brazil and the United States have been close allies as of late, as Brazilian President Jair Bolosonaro has enjoyed a close relationship with President Trump. In May, Trump said that Brazil was to be granted a special military status, declaring the South American nation a “major non-NATO ally.” Along with this, both Argentina and Brazil were absent from an earlier Treasury Department report accusing countries of manipulating currency, so this tariff imposition has caught them both by surprise.

These tariffs are being put in place under Section 232 of the Trade Expansion Act of 1962, and therefore are not eligible for drawback refunds unlike section 301 duties imposed on imports from China.

Meanwhile, it very much looks as if the remainder of the products from China not currently facing tariffs will have them imposed soon. These are slated to go into effect on December 15th, and recent remarks from both sides of the negotiation seem to indicate that no immediate resolution is coming between the two countries. This means potentially billions in additional tariffs paid by US importers will be coming this month.

Now more than ever it is important to have a Customs broker that understands the issues with changing tariff rules, and a drawback specialist to ensure you can maximize your refund of said new duties. JM Rodgers excels at both of these, and if you’d like to discuss more please contact our VP of Sales Andrew Galloway at agalloway@jmrodgers.com or 973-726-5340.