U.S. may Impose Quotas on Steel Imports from Brazil
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In case of import tariffs on steel and aluminum announced by the Trump government in Mar'18, seven of its trade allies including Canada, Mexico, Brazil, South Korea, Argentina, Australia, and European Union were given exemption till 1 May'18. These countries were given a month's deadline to negotiate "satisfactory alternative means" to address what the administration calls the threat to U.S national security resulting from its current levels of steel and aluminum imports.
While all the countries are negotiating hard with the Trump government to evade steep import tariffs, market reports suggest that U.S. government is looking out to impose a quota on steel imports from Brazil. Although the actual quantity on which quota will be set has not been disclosed, the same is expected to be imposed based on Brazil's current quantity of steel exports to U.S.
According to U.S. customs, although Brazil do not have its position in the list of U.S. top 10 sources of steel imports, in 2017 steel imports to U.S. from Brazil have gone up by 20% against previous year. Also, U.S. tops the list of Brazil's steel export destinations with a percentage share of about 34% in 2017.
The talks between Brazil and U.S. were going on since past few days and as per market sources, the proposal took shape on Thursday during the Summit of the Americas in Lima, Peru.
Which is the first country to have quota on steel exports to U.S.?
The first country to negotiate with U.S. after tariffs imposition and receive quota on steel imports was South Korea. The two countries reached on an agreement to revise their six-year-old bilateral trade deal known as Korus.
According to the agreement, while Korea was able to avoid the steel tariff, shipments of the metal to the U.S. was made limited to a quota of about 2.7 million tonnes a year.
According to South Korean steel ministry, the quota is unlikely to hurt South Korea's steel exports as sales to the US account for 11% of country's total steel shipments overseas. The quota is set at 70% of the average steel sales to the US during 2015-2017.
