Trumps nixes prior deal, hits Brazil, Argentina with tariffs

Accusing Brazil and Argentina of manipulating their currencies and hurting American farmers, President Donald Trump said Monday that he would impose tariffs on steel and aluminum from the two nations. In a message on Twitter, Trump said the tariffs are “effective immediately.” Why it matters

The move would shatter previous agreements with those countries. The United States exempted Brazil, Argentina and other countries from the president’s sweeping metal tariffs in March 2018, with the United States saying it would continue negotiations with those countries to improve their trade terms. In May 2018, the United States announced that it had reached an agreement with the countries that would cap their metal shipments at a specific volume each year.

“I gavethem a big break on tariffs, but now I’m taking that break off because it’s very unfair to our manufacturers and very unfair to our farmers,” Trump told reporters Monday. “Our steel companies will be very happy, and our farmers will be very happy.”

Why it happened

It is unclear what prompted Trump to reverse previous agreements. But last week the Brazilian currency, the real, fell to a record low against the dollar after the country’s economic minister signaled that he was not concerned about exchange-rate fluctuations.

Argentina’s peso has weakened amid an economic crisis.

Economists and government officials have rejected the idea that Brazil and Argentina are manipulating their currencies, but those currency movements have made their goods cheaper to purchase abroad, affecting the agricultural sector and the U.S.China trade war.

China is a major purchaser of U.S. agricultural goods. As the U.S. and China have slapped tariffs on each others’ products over the past year, Chinahas shifted to purchasing products from Brazil and Argentina, a move that has rankled U.S. officials.

How they responded

Brazil’s conservative populist president, Jair Bolsonaro, who had gone to great lengths to strengthen ties with the Trump administration, responded, “Aluminum?” when reporters presented him with Trump’s tweet.

“If that’s the case, I’ll call Trump. I have an open channel with him.”

Dante Sica, Argentina’s minister of production, said when he was in Washington last week “there was no sign whatsoever that there would be any kind of change,” he said.

What’s ahead

Any new tariffs would likely face legal challenges.

In a recent decision, the U.S. Court of International Trade ruled that Trump could not raise tariffs on steel exports from Turkey because a 180-day deadline set for that decision had already elapsed.

Jennifer Hillman, a senior fellow for trade and international political economy at the Council on Foreign Relations, said the law that the president had used to issue the tariffs did not give him the authority to alter tariffs outside of certain time limits.

SCOTT OLSON /GETTY IMAGES 2018 In March 2018, President Donald Trump said he would give some countries a break on announced metal tariffs, and two months later the U.S. said it had agreed with Argentina and Brazil on a cap for annual metal shipments. On Monday, Trump announced he would be “taking that break off.”