After returning from a long weekend of thanksgiving, the President of the United States dealt another blow to the world economy. In his Twitter, trump said that the US imposes tariffs on steel and aluminum for Brazil and Argentina. The reason for the “massive devaluation of their currencies, which is bad for American farmers.”
“So I will restore tariffs on all steel and aluminum that come to the United States from these countries,” wrote trump.
While adding that he would like to the Federal reserve acted as
“to countries that do not use our strong dollar, continued to fall into the abyss, devaluing its currency”.
The decision of the President of the United States to extend the front of the trade war is a little surprising. In the spring of 2018, the administration has established trump’s 25% tariff on steel and 10% for aluminium for many trading partners, including the European Union, Mexico and Canada (later the tariffs were withdrawn from Canada and Mexico as part of the agreement USMCA).
Initially, the administration trump threatened and other trading partners — including Brazil and Argentina — the same rates, but in the end compromised. Instead of tariffs, the U.S. has restricted the import of steel and aluminium quotas.
However, according to CNN, after Canada, Brazil in early 2019 has put more steel in the United States. In 2018, its exports there totaled $2.6 billion Argentina is not such a large supplier is only $700 million, writes the Washington Post.
The devaluation to do with it?
Trump in a tweet blamed Brazil and Argentina in the “massive devaluation” of their currencies. But both these countries are dealing with their own economic problems, not related to dollar.
At least, according to the Department of the Treasury trump, as of may 2019 neither Brazil nor Argentina was not in the list of countries demanding more attention to their monetary practice. Since then, the situation with the national currency in these countries is virtually unchanged. Therefore, it is logical to assume that the decision trump is dictated by quite other motives.
The fact that
Brazil and Argentina got their dividends from the trade war the US and China
Currently, Brazil is the largest supplier of soybeans to China. Argentina has also signed an agreement on the export of this product (mainly animal feed) in China. But given the instability of China-us negotiations and the pressure that they exert on the world economy, it is unclear how deep or long will such benefits for any country.
He was still a partner
Moreover, the new President of Brazil, Jar of Bolsonaro leads an explicit Pro-American policy. He strengthened relations with the administration of the trump. In this case the President of the United States recently argued that the free trade agreement between the US and Brazil possible.
Just last week the Minister of economy of Brazil, Gedes, Paul held a number of meetings with representatives of U.S. trade, including with the Minister of Finance Steve Mochina. In anticipation of these meetings, the Gedes said Washington like the economic policy of the administration of Bolsonaro.
Commenting on the tweet trump the news Agency Reuters, the Brazilian President said he has “open channel” with trump, and that he would call him to discuss the statement.
“Our economy is based on goods. This is what we have,” — said the President of Brazil. “I hope he understands and that he does not punish us with this. I’m pretty sure he’ll listen to us”.
Meanwhile in Argentina there is a change of government. President Macri is leaving his post December 10, it will replace Alberto Fernandez.
Thus, the statement of trump definitely sounds at an inopportune moment for the relatively new President of Brazil (especially given the fact that Bolsonaro promoted closer trade ties with the United States) and for the incoming administration of Argentina.
The main question — why?
It happens at an inopportune time for the trump, because now the American leader trying to resolve long-standing trade dispute with Beijing.
The US and China said they had reached “first phase” of the trade deal in October, but conditions are still unclear, and the agreement is still officially signed. It’s not even clear whether this will happen before the end of the year, and the protests in Hong Kong recently to further exacerbate the relationship. Especially considering
the Hong Kong legislation on human rights, signed by trump recently.
American business has long complain to your President,
because trade war trump with China has hurt a lot of American producers and farmers. In a broader sense, the spat between the two powers shook the entire world economy. In addition, trump is still not resolved a trade conflict with the European Union.
And now he intends to usher in the year of his re-election, adding even more instability to the us economy. Because the response of Brazil and Argentina will hit, not least for American businesses.