New steel and aluminum tariffs levied against Argentina and Brazil could cause consumers and manufacturers even more pain.
Donald Trump is slapping tariffs on steel and aluminum imported from Argentina and Brazil, increasing the costs for American automakers and other manufacturers, the New York Times reported Monday.
Trump announced the new tariffs on Twitter Monday morning, accusing both South American countries of currency manipulation.
"Brazil and Argentina have been presiding over a massive devaluation of their currencies[,] which is not good for our farmers," Trump wrote. "Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries."
Trump's announcement implies that there were once steel and aluminum tariffs imposed on Argentina and Brazil, but the Times notes that the two countries were always exempt from Trump's 2018 tariff announcement. So, rather than restore any tariffs, the Trump administration would be adding brand new 25% tariffs on steel and 10% on aluminum, according to CNN.
Once the tariff is in place, American car companies will be forced to pay higher prices for steel, and other manufacturers will see their costs go up, according to the Times. During the first nine months of 2019, the U.S. imported about 11% of its steel from Brazil, CNN noted.
The announcement caused turmoil on the stock exchange, with an overall drop Monday morning despite a small bump for U.S. steel companies, Reuters reported.
As for Trump's claim of currency manipulation, CNN reported the Argentine peso is down 37% against the dollar with the the Brazilian real down roughly 8%.
While Trump blamed currency manipulation for the tariffs, Brazil and Argentina happen to be two of the countries benefiting from Trump's ongoing trade war with China. As China cut back on purchasing American agricultural products in retaliation for Trump imposing a series of tariffs, Brazil and Argentina stepped up to fill the gap.
Brazil alone saw a 30% increase in soybean exports after China froze our U.S. companies over the summer, Yahoo News reported in September.
American farmers are facing record bankruptcy rates as the trade war with China drags on, despite Trump's massive, multi-billion dollar bailout program aimed at farmers. In fact, Trump's farmer bailout is twice the size of President Obama's auto bailout program, which saved the American auto industry in the midst of the Great Recession.
American consumers are also bearing the brunt of Trump's ongoing trade wars. Trump has repeatedly lied about who is paying for the tariffs. But while Trump has claimed China is paying billions in tariffs, it is American companies who must foot the cost, typically passing off that cost to consumers.
"U.S. consumers are paying for the tariffs in terms of higher prices," Alessandro Nicita, an economist at the U.N.'s trade agency, said recently.
Roughly translated: The trade war could mean consumers will pay more for their vehicles unless Trump backs off.
Trump's trade wars are also hurting the manufacturing sector, with 27,000 job losses in Michigan, North Carolina, Pennsylvania, and Wisconsin during the first nine months of 2019. Trump's "escalating trade war with China is taking a big bite from the manufacturing sector," CNBC reported in August.
The manufacturing industry officially fell into a recession in September.
Published with permission of The American Independent Foundation.