U.S. sees no political climate to lift tariffs on Brazilian steel

Restrictions on Brazilian steel were imposed in 2018 during the Trump administration


Restrictions on Brazilian steel were imposed in 2018 during the Trump administration — Foto: Reprodução/Severstal

Restrictions on Brazilian steel were imposed in 2018 during the Trump administration — Foto: Reprodução/Severstal

The Biden administration has signaled to Brazil that it will not meet so soon the demand to review the quotas that limit the ingress of domestic steel in the U.S. market — although it has already made agreements with the European Union and Japan.

Valor has learned that the U.S. deputy secretary of commerce, Don Gaves, advised Brazilian representatives when he was in Brasília about a month ago that there was no political climate yet in the U.S. to deal with the review of the situation of Brazilian steelmakers.

However, the number 2 at the Commerce Department “promised to make the best efforts,” according to a source.

When asked recently in an interview about lifting tariffs on steel from China, the U.S. Trade Representative Katherine Tai said that “with respect to the tariffs, our approach, as with everything in this relationship, is to be strategic.”

The restrictions on Brazilian steel were imposed in 2018 during the Trump administration, despite President Donald Trump ideological affinity with the Bolsonaro administration. That was when Mr. Trump, amid trade tensions with China, decided that foreign steel threatened to “weaken national security” and imposed an additional 25% tariff on imports of steel products and 10% on aluminum imports, causing tremendous irritation in Washington allies who saw the measure as retaliation.

Of the $2.3 billion of steel that Brazil exports on average to the U.S. per year, 85% is semifinished products, that is, raw material for the American steel mills to make the final product.

Under President Joe Biden, the U.S. and the European Union reached in October an agreement whereby Washington kept the additional tariffs, but exempted a specific portion, allowing European companies to sell a certain “historical volume.”

Later, Washington struck a deal with Japan, another major ally, eliminating tariffs since April within an import quota of 1.25 million tonnes of Japanese steel — a volume still lower than the 1.8 million tonnes exported by Japan in 2018.

In the case of Brazil, the assessment in Brasília is that the Biden administration has no appetite to deal with trade. Last week, during the Summit of the Americas, the U.S. insisted on redesigning supply chains amid the new geopolitical situation, but showed nothing concrete, according to a source.

*By Assis Moreira — Geneva

Source: Valor International

Brazil will “dance” with U.S., China, Guedes says in Davos

Guedes met UBS CEO Colm Kelleher — Foto: Reprodução/Twitter/ME

Guedes met UBS CEO Colm Kelleher — Foto: Reprodução/Twitter/ME

Economy Minister Paulo Guedes said that “everyone is going after Brazil” at the World Economic Forum and that, with the turnaround in world geopolitics, the country will “dance” with the U.S. and China at the same time.

In a conversation with journalists, Mr. Guedes said that Brazil suffered pressure from both the United States and Europe in the wake of the war in Ukraine to stand on one side. But that now “nobody is cursing us” and Brazil is seen as a solution to energy and food crises.

As an example, he said that the new interest in Brazil with a series of bilateral meetings on Tuesday in Davos — with the CEOs of UBS, Mittal, Alibaba, Sem Merck, Claure Capital, YouTube, Canada Pension Plan Investment (CPP), as well as lunch with investors promoted by Itaú Unibanco.

“There is demand from 30 of the largest companies in the world, but we can’t supply everyone,” said the minister.

In the World Economic Forum, Brazil is almost absent from the agenda, without any specific debate. The public manifestations of most of the authorities present are about the size of a possible recession in the European Union, in the United Kingdom, and perhaps in the U.S. after next year. In other words, little is said about Brazil, except in restricted circles that know more about the country.

According to the minister, “people do not understand: the world has changed and Brazil’s position has improved.” He says that “Brazil has lost 30 years, it has not connected (with global value chains). China got out of poverty, Thailand, everyone went up, and Brazil was left hopping.”

The minister adds that with the crises caused by the pandemic and the war in Ukraine, other countries got into difficulties, but not Brazil. And so, in his vision, the country can redesign its production chains with new axes, such as renewable energy and semiconductors.

In this scenario, said Mr. Guedes, the pressures came on Brazil. He said that the Europeans asked Brazil if the country was on their side or on Russia’s, if it was with the Brics or with the OECD.

On the one hand, the U.S. Treasury Secretary Janet Yellen made it clear that Washington would redesign investment criteria and that the world will never be the same. In other words, the U.S. needs closer supply chains and reliable partners.

The way Brazil is going to stand, according to the minister, is to be “the guy that is going to give food and energy security to Europe. And the U.S., which Brazil is close to and a friend of, will not need to go to China.”

As for China, “the Chinese and the Americans had a synergy that lasted 30 years, then China grew and they started fighting. We are going to dance with both of them.

Furthermore, Brazil wants to accelerate its integration into the OECD. He said he has established a good relationship with Mathias Cormann, Secretary-General of the OECD, who will visit Brazil in the near future.

Source: Valor International

Will the trade war spell the end of Chinese stock listings in America?

merican investors wanting a piece of Chinese firms, whether state-owned oil majors or tech stars, need not stray beyond Wall Street. Over the past two decades some 200 Chinese firms have gone public in America, more than from any other foreign country. (Most have their main listing there; a few have a “secondary” one, with a main listing in China.) These firms’ total market value is more than $1trn. For America’s stock exchanges, that is a great triumph. But trade hawks are starting to describe it as a great liability.

In a letter in April a bipartisan group of politicians led by Marco Rubio, a Republican senator, said American investors faced risks because of exposure to Chinese companies “that pose national-security dangers or are complicit in human-rights abuses”. Steve Bannon, President Donald Trump’s former chief strategist, expanded the focus to all Chinese stocks in America in an interview published on May 22nd in the South China Morning Post. “The next move we make is to cut off all the ipos [initial public offerings], unwind all the pension funds and insurance companies in the us that provide capital to the Chinese Communist Party,” he said.


Source: The Economist

Trump hails ‘treasured alliance’ between US and Japan

President Trump on Monday quoted ancient Japanese poetry and called the relationship between the US and Japan a “treasured alliance” during a toast before a state banquet with newly crowned Emperor Naruhito in Tokyo.

The Imperial Household Orchestra played “The Star-Spangled Banner” at the Imperial Palace and the dinner crowd toasted and clapped.

​”​Good evening, we are profoundly honored to return to Japan as your nation​’​s first state guests following the enthronement of his majesty the emperor​,” Trump, wearing​ ​black tie, told the assembled guests.

“We thank the people of Japan for their incredible hospitality and warm welcome in this majestic land​,​”​ he said, adding that he values the “treasured alliance” between the US and Japan.

He also recited ancient Japanese poetry.

“It also reminds us that in times of change, we can take comfort in our inherited traditions. In the fifth book of the Manyoshu where the term Reiwa originates, the writings of two poets offer important insights​,” Trump said.

​“The second poet, a good friend of the first, reminds us of our solemn responsibilities to family and future generations. Both are beautiful lessons passed down from ancient wisdom​,” he continued. “Today we embrace the limitless potential before us.​”​

His reference to Reiwa, which means “beautiful harmony,” is the name of the new era that began with Naruhito’s ascension to the throne on May 1.

Trump is the first world leader to meet Naruhito and Empress Masako during his four-day visit to Japan.

Following his remarks, the orchestra played the Japanese national anthem, “Kimigayo,” and everyone stood.

Guests, including Trump and first lady Melania Trump and US Ambassador to Japan William Hagerty and his wife, Chrissy, dined on a six-course banquet.

The dishes featured consommé a la royale​, turbot a la meunière sauce tomate​, cote de boeuf rotie, salade de saison, glace Mont Fuji and a dessert of melon and grapes.

During his visit, Trump rekindled his relationship with Prime Minister Shinzo Abe.

The two spent hours talking trade and the threat from North Korea.

They also played 16 holes of golf and lunched afterward on double cheeseburgers.

The two leaders also attended a sumo match, with Trump presenting the champion with a US-made trophy called the “President’s Cup.”

In a news conference earlier Monday, Trump touted his relationship with Abe.

“This visit has also been a chance for Prime Minister Abe and me to strengthen our close friendship and the friendship between our two nations​,” he said. “​The alliance between the United States and Japan is a cornerstone of stability and prosperity in the region and all around the world.​”​


Source: New York Post

Brazil farmers halt soy sales as real strengthens, China buys U.S. supplies

Farmers have halted sales of Brazil’s soybeans as port premiums swooned, the real currency strengthened and a pause in a trade war prompted top importer China to purchase soy from the United States, growers and trading companies said.

Poor market conditions are also affecting planting decisions for Brazil’s 2019/2020 crop that will be sown starting from September. Farmers generally buy inputs like seeds and fertilizers through barter arrangements with traders, used as a form of credit until the crop is harvested, and such deals are way behind schedule, farmers and companies said.

“The market is stalled,” said a soy buyer representing a large trading firm in Mato Grosso, Brazil’s top soy-producing state, who asked for anonymity to speak freely.

Unlike other years, grain handlers did not launch barter campaigns in December attempting to lock in farmer’s 2019/20 harvests, as prices for imported fertilizers rose and locally priced soybeans fell on a stronger real, the buyer said.

Mato Grosso, which will collect an estimated 32 million tonnes of soybeans this season, still has not sold about half of its 2018/2019 output.

“Spot sales slowed as farmers await better prices,” soy grower Cayron Giacomelli said by telephone. At the same time forward sales are hampered by trade war uncertainties, he added.

Growers have sold about at 46.6 percent of Mato Grosso’s estimated output for this season, according to farmer-backed state research institute Imea, below a 49.9 percent five-year average.

The situation bodes ill for the entire supply chain as farmers displeased with margins tend to hold out and pressure transport, trading and fertilizer firms to cut their own margins.

Soybean exports are also below expectations in early 2019 given how advanced the harvesting is, said Frederico Humberg, founder of AgriBrasil, a fast-growing grain origination firm in São Paulo.

Humberg said China’s return to the U.S. soy market after a truce in the trade war slashed Brazil’s port premiums and hindered a potential rise in local soy prices. Farmer hoarding is also keeping a lid on freight prices, he said.

“Price-wise, this is a pessimistic scenario for farmers,” Humberg said, arguing high U.S. soy inventories tend to continue to constrain Chicago.

Grain grower association Aprosoja said the trade war is bad for local farmers because their benchmark is Chicago and the spat left U.S. soy silos filled to the brim.

As harvesting progresses over the next 20 days, Brazilian farmers who lack storage space may be forced to sell, according to Daniel Latorraca, Imea superintendent.

“Whatever is left in storage will only be sold after the peak of the season around June,” he said.


Source: Reuters

Brazil’s real, Mexican peso firm as dollar weakens

The Brazilian real and Mexico’s peso firmed on Monday as the dollar slipped on mounting geopolitical concerns in a week when investors will watch central bank minutes and earnings.

The dollar dipped after U.S. retail sales data for September missed expectations. The dollar and global stock markets were also pressured by tensions between Saudi Arabia and the West, along with concerns such as the U.S.-China trade war and rising oil prices.

The Mexican peso strengthened for a third straight day ahead of minutes of the central bank’s October meeting expected on Thursday.

However, “volatility is expected to continue in the short term” for Mexico’s peso “as investors adjust their portfolios to incorporate a picture of higher yields of U.S. bonds, in a stock market with relatively high valuations,” analysts at Santander said in a note.

The country’s stock market climbed back from an early decline as the Dow Jones Industrial index and the S&P 500 bounced off session lows.

Bazil’s real rose more than 1 percent, resuming trading after a three-day weekend. The currency has gained nearly 9 percent so far this month, second only to the Argentine peso. The real has been boosted by growing investor hopes that market-preferred presidential candidate Jair Bolsonaro will win the election.

Brazil central bank President Ilan Goldfajn said late on Thursday that the country was well positioned to withstand shocks to its economy, and reiterated that basic interest rates will be raised only if there is a worsening balance of risks and inflation expectations.

The stock market rose after two losing sessions, with gains driven by a 2.4 percent rise in iron ore miner Vale as its third-quarter production reached an all-time high.

Gains however, were capped by a 33 percent plunge in shares of Smiles Fidelidade SA a loyalty program of airliner Gol Linhas Aéreas Inteligentes, after Gol said it plans to buy out minority shareholders in Smiles via a share swap whose terms will be determined by an independent committee.


Source: Reuters