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The Brazilian Executive Management Committee for the Foreign Trade Chamber (Gecex-Camex) decided to increase steel import duties during one year to 25%, while establishing import volume quotas for 11 steel products, according to a document published on Tuesday April 23.
The list includes steel hot-rolled, cold-rolled, hot-dipped galvanized and Galvalume coil, as well as steel wire rod and oil country tubular goods (OCTG).
It is still unclear when the measure will come into force and how it will work in technical terms, such as how customs control will operate for entry of those products into the country. Brazil’s Industry, Development and Trade Ministry (MDIC) said that the duty increase will also need to be approved by the Mercosur trade bloc.
According to MDIC, after an analysis, the increase was granted to steel products, each identified by its Mercosur Common Nomenclature (NCM), whose 2023 volume of imports exceeded the average of purchases made between 2020 and 2022 by 30%.
Geraldo Alckmin, MDIC minister and Brazilian vice president, said in a press conference on Tuesday that the announced quotas were set by adding 30% more volumes to the 2020-2022 average.
Of the 15 steel products whose imports grew more than 30% from 2020-2022 to 2023, the ministry evaluated that four showed price variations and will require further studies.
Market participants were divided on the measure’s effectiveness. Several sources told Fastmarkets on Tuesday morning that they saw similarities between the proposed action and the US’ Section 232 trade sanctions, as well as the EU’s steel import safeguards.
While industry representatives considered the restriction important for the sector, representatives of the consumer goods sector questioned the fact that the quotas were defined regardless of the origin of the material.
“We would also surcharge steel mills that do not appear to be practicing dumping,” one source said.
The consumer goods sector was one of the more vocal sectors pressuring the government against a tariff increase, alleging a possible inflationary risk.
But MDIC said that technical studies showed that the measure “will not have an impact on consumer prices or derivative products in the production chain.”
During Tuesday’s press conference, Alckmin highlighted that the steel industry is important, and a necessary base for the country, but that the tariff was analyzed carefully and will be monitored.
“Industrial entities asked for tariff changes on 35 steel products; we reduced them to 11 and even established a quota 30% higher than the average,” he said. “The quota is large, and only those who break it will have the extra rate.”
The government expects that the decision will contribute to reducing the idle capacity of the national steel industry.
“We did this to preserve jobs, preserve incentives for innovation in the industry, but still with careful measures,” Alckmin said.
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- [Editor:kangmingfei]
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