Argentina, Brazil Disclose Quota Details for Permanent Exemptions

Argentina and Brazil recently agreed to deals resulting in permanent exemptions from Section 232 tariffs on iron and steel products and aluminum products. Argentina will be exempt from tariffs on both aluminum and steel after agreeing to new quotas on each. Brazil, on the other hand, remains subject to 10% aluminum tariffs after rejecting quantitative restrictions, though it will get an exemption from the 25% tariff on steel.

Brazil did not initially agree to quotas in either steel or aluminum, top government officials announced May 2, but after the U.S. told Brazil it would impose quotas unilaterally, the country said their aluminum industry would prefer to pay a 10 percent tariff, while the steel industry would find quotas less damaging. Brazil says it makes no sense that its steel imports imperil the U.S. steel industry's viability. "The industries of both countries are integrated and complement each other," the ministers of Industry, Foreign Trade and Services and Foreign Affairs said. "About 80 percent of Brazilian steel exports are of semi-finished products, used as inputs by the American steel industry." Moreover, Brazilian steel mills are a major customer of U.S. coal used for turning iron into steel.

"The Brazilian Government regrets that the negotiating process has been interrupted and reiterates its willingness to build reasonable solutions for both parties. Furthermore, it reiterates its conviction that any restrictive measures would not be necessary and would not be justified under any circumstances," a news release said.

Argentina agreed to a quota of 180,000 tons on both aluminum and steel exports, which is below last year's steel exports but above the level in 2015 and 2016, according to press reports in that country. In 2017, Argentina exported 200,000 tons of steel, but had only sold 80,000 tons in 2016 and 107,000 tons in 2015. Argentina exported 260,000 tons of aluminum to the U.S. in 2017. The decision of the United States was already made and in this context Argentina had to negotiate, the government said. The steel quota is about 135 percent of the three-year average; the aluminum quota is 100 percent of the three-year average, Minister of Production Francisco Cabrera told reporters May 1.