Trump taxation can harm USA and open new doors for exporters

United States President Donald Trump officially announced on Monday (10), the taxation of 25% on steel and aluminum imports. The measure was criticized by exporting countries, including Brazil, but so far, the government has not commented and has acted with caution. Despite Trump’s populist discourse to safeguard national interests, the measure may not have the effect boasted by him.

As a way to satisfy his electorate with simplistic and populist answers, the Republican has said that the measure would help to boost internal production, which could contribute to warm the economy and generate more jobs. But the effect may be contrary and even leads to increased inflation, which has been one of the main concerns of the US.

From March 4, the measurement establishes at least 25% on the steel and removes the exceptions and exemptions established in 2018, in its first term, and imposing the same percentage on aluminum, which until then had A 10%tax.

At that time, Trump ended up retreating from taxation to some countries – including Brazil, which then had as president one of his main flatterers, Jair Bolsonaro (PL). At this time, it is not yet possible to say which position will adopt in relation to Brazil.

Also read: Trump wants to tax steel and aluminum by 25%; Brazil is among the largest exporters

When he opted for this same type of tariff about seven years ago, however, reality showed that the populist bet has charged a bitter price for his own country. As reported by The Washigton Post, an analysis of the 2018 tax application – made by the Peterson Institute for International Economics, considered an independent entity – pointed out that the policy were created about 8,700 jobs and generated about US $ 2.4 billion in profits “before taxes for steel companies”. But “household industries bought steel in the United States paid another $ 5.6 billion thanks to protection – a cost of about $ 650,000 for each job created in the steel industry.”

Another study, done by researchers from the Harvard and California universities in 2020, indicated that the tariffs then applied resulted in the creation of only 1,000 new jobs in the US steel industry, facing the loss of 75,000 chains in this sector due to high cost that the taxation ended up generating.

According to Nexo Jornal, a 2024 report from the Peterson International Institute of Economics estimated that if campaign promises are fulfilled regarding the imposition of new tariffs, American inflation could rise between 6% and 9% in 2026.

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With regard to steel, for example, Canada is the main exporter, with the sale of 6.57 million liquid tons last year, followed by Brazil (4.5 million), Mexico (4.18 million) and South Korea (2.8 million).

After Trump’s official announcement, Canada Prime Minister Justin Trudeau classified the initiative as “unacceptable” and added that “the Canadians will rise hard and firmly if necessary.”

Marcelo Ebrard Casaubón, Secretary of Economics Di Mexico, said the measure “lacks economic foundation.” According to him, “Mexico matters more steel from the US than exports, so there is no logical reason for tariffs.” South Korea’s acting president Choi Sang-Mok, in turn, said he will seek to dialogue with the US government.

Also read: Flooding: Trump’s strategy to mislead media and opposition

China – which is not among the main exporters of these items to the US, but dominates this industry globally – has not yet commented.

In the case of Brazil, the government has not yet officially positioned itself, but, according to reported on Tuesday (11) by the blog of journalist Andrea Sadi, the government would be observing the reactions of Mexico, China and Canada to respond to taxation. And, according to Estadão, the theme was being discussed between Lula, Minister Fernando Haddad of Fazenda, and Vice President Geraldo Alckmin, who is also Minister of Industry, Commerce and Services.

Recently, asked about the “tricky tariff”, President Luiz Inacio Lula da Silva opted for a haughty, pragmatic and non -aggressive tone: “If he [Trump] Taxing Brazilian products, there will be reciprocity in Brazil to tax products that are imported from the US ”.

To compensate, one of the alternatives being studied is the taxation of the big techs, which appear among Trump’s main supporters.

In this scenario, US positioning can ultimately end up creating a new window of opportunity to seek new business partners, including the Brics and the European Union countries.

“Regarding the economic measures adopted by the US government, Brazil’s position must be pragmatic, aligned with the interests of Brazilian society. Arguably, prudent action is to increase the diversity of business partners, at this time, the entry into force of the agreement between Mercosur and the European Union, ”the Professor of International Relations at the University of São Paulo (USP) Pedro told Agência Brazil Agency Dallari.