Brazil’s Government Tackles Steel Import Surge with 25% Tariff Proposal

Aco Brazil

 

Brazil's steel industry is under increasing strain as rising steel imports challenge the competitiveness of domestic producers. In response, the country’s foreign trade committee, Gecex, has preliminarily approved a 25% tariff hike on additional steel products, including wires and construction nails. This move reflects ongoing efforts to curb the influx of cheaper imports that have put pressure on local manufacturers.

Mixed Reactions from the Industry

Despite the new tariff proposal, the reaction from the steel sector has been mixed. Some industry players had anticipated more aggressive interventions, such as stricter quotas or broader import controls. Without specifying a minimum taxable volume, the measure has left room for uncertainty, prompting many domestic producers to favor antidumping actions as a more precise solution.

Antidumping measures target specific products sold at unfairly low prices, which domestic manufacturers believe would more effectively level the playing field. The growing preference for antidumping actions signals a shift in strategy as the industry seeks tailored solutions to rising import volumes.

Support from Aço Brasil and Concerns over Unfair Competition

Aço Brasil, the leading steel industry association, voiced strong support for the 25% tariff. Executive President Marco Polo de Mello Lopes emphasized the association’s longstanding advocacy for such measures to safeguard domestic producers.

Sicetel, the national syndicate of ferrous metal drawing and rolling industries, also backed the decision, citing the detrimental impact of cheap imports on local producers. According to Sicetel, imports in their sector surged 24% in 2023, with Chinese steel accounting for 57% of total imports during the year’s first nine months.

Challenges Persist for Domestic Producers

Even with protective measures like tariffs, Brazil’s domestic steelmakers continue to face stiff competition due to significant price disparities between foreign and locally produced steel. Critics argue that the lack of a comprehensive strategy, combining tariffs with robust antidumping regulations, may prolong the struggles of domestic producers.

Before the 25% tariff hike becomes effective, it requires approval from Mercosur trade bloc members and publication in Brazil’s official gazette. Meanwhile, ongoing antidumping investigations suggest the government is exploring additional steps to protect local steelmakers while mitigating the risk of cost increases for domestic consumers.

This decision underscores the delicate balance Brazil’s government must maintain—addressing unfair competition from imports while ensuring economic sustainability for its steel industry.