US President Donald Trump says in a tweet, 'Brazil and Argentina have been presiding over a massive devaluation of their currencies.' Picture: MANDEL NGAN / AFP
US President Donald Trump says in a tweet, 'Brazil and Argentina have been presiding over a massive devaluation of their currencies.' Picture: MANDEL NGAN / AFP

Waghington  — US President Donald Trump on Monday said he would restore tariffs on US steel and aluminium imports from Brazil and Argentina, surprising officials in the two South American countries and prompting them to seek explanations.

Emerging market stocks and the highly sensitive Mexican peso slid to session lows following Trump’s tweet, which came in an early morning post on Twitter that gave no other details on the planned trade action.

Representatives for the Office of the US Trade Representative could not be immediately reached for comment.

“Brazil and Argentina have been presiding over a massive devaluation of their currencies, which is not good for our farmers. Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the US from those countries,” Trump wrote.

Brazil’s President Jair Bolsonaro, a Trump fan who has actively sought closer US ties, said in local radio interview that he did not think Trump’s decision was a form of retaliation. However, he also expressed hope that Trump would show mercy to Brazil’s commodity-based economy.

“I’m going to call him so that he doesn’t penalise us,” Bolsonaro said. “Our economy basically comes from commodities, it’s what we’ve got. I hope that he understands and that he doesn’t penalise us with this, and I’m almost certain he’ll listen to us.”

Argentinian production minister Dante Sica said Trump’s announcement was “unexpected” and he was seeking talks with US counterparts. Additionally, Argentina’s foreign ministry said it will begin negotiations with the US state department.

Trump on Monday also urged the Federal Reserve to prevent countries from gaining an economic advantage by devaluing their currencies.

“The [Federal] Reserve should likewise act so that countries, of which there are many, no longer take advantage of our strong dollar,” Trump tweeted. “Lower Rates & Loosen — Fed!”

Trump has repeatedly urged the US central bank to lower rates to below zero, arguing that negative rates in Europe and elsewhere give those countries a competitive advantage.

However, Fed policymakers have been reluctant to take the unorthodox policy steps tried by other global central banks. The US central bank’s policymaking committee holds its next meeting on December 10-11.

Reuters