Threat of US tariffs on Argentinian, Brazilian steel and aluminium hits mining shares |
US president reimposes import duties
THE THREAT of the re-imposition of US steel and aluminium tariffs on Brazil and Argentina yesterday sent tremors through the market, with some JSE-listed mining and resources stocks falling up to 8 percent.
US President Donald Trump said in a tweet on Monday that he aimed to restore the tariffs on all steel and aluminium that was shipped from those countries, launching a new trade war with Brazil and Argentina.
“Brazil and Argentina have been presiding over a massive devaluation of their currencies, which is not good for our farmers.
“Therefore, effective immediately, I will restore the tariffs on all steel and aluminium that is shipped into the US from those countries,” said Trump in the tweet.
In March 2018 Trump said that in the interest of national security, the US would introduce import tariffs on all imports of steel and aluminium to the US.
Trump then announced plans to impose a global tariff of 25 percent on steel and 10 percent on aluminium imports into the US.
Both Brazil and Argentina were exempted from the tariffs last year when Trump was attempting to avoid a trade war with those countries.
South Africa was also exempted from the tariffs.
Last year the Department of Trade and Industry (dti) said that South Africa’s exports to the US on steel amounted to $950 million (R13.89 billion) in 2017 and accounted for 1.4 percent of US’s global imports.
“The South African exports are in some cases used as inputs into further processes in the US manufacturing sector, thus contributing to US jobs and production,” said the dti last year.
Trump’s latest tweet sent shock waves in the market with Australian headquartered mining and metals companies BHP and South32 among the hardest hit in intra-day trade.
BHP, which operates iron ore mines in Western Australia, declined 2.42 percent to close at R318.79 on the JSE yesterday. South 32, which operates the Hillside Aluminium Smelter in Richards Bay, fell 4.30 percent to close at R25.14.
South Africa’s biggest iron ore producer Kumba Iron Ore fell 1.48 percent to close at R388.41, while its counterpart Assore closed 3.20 percent lower at R236. Iron ore is the main ingredient in the production of stainless steel.
ArcelorMittal South Africa (Amsa), South Africa’s biggest steel maker, declined 7.10 percent to close at R1.57.
Amsa said in 2017 South African exports to the US amounted to less than 2 percent of the company’s total sales of more than 4 million tons in 2017.