Brazil Raises Steel Import Tariffs to Protect Domestic Industry

Brazil has announced a significant increase in import tariffs on steel products to safeguard its domestic industry. The government has raised the tariff to 25% for 11 types of iron and steel products. This decision comes after more than a year of analysis by the Executive Committee of Administration (Gecex) of the Foreign Trade Chamber (Camex).

The move responds to a request from the National Union of the Ferrous Metal Drawing and Rolling Industry (Sicetel). The union had pointed out unfair competition from imported products, particularly from China. Previously, these 11 steel products faced import tariffs ranging from 10.8% to 14%.

Last April, Gecex and Camex had already imposed import quotas on these products for a year. Imports exceeding the authorized volume were subject to a 25% tariff. Now, this 25% tariff will apply to all imports of these products, regardless of volume.

The government has also increased the import tariff on sodium chlorite from 9% to 10.8%. Additionally, for six months, the agency has raised import tariffs on optical cables and fibers to 35%.

Brazil Raises Steel Import Tariffs to Protect Domestic Industry

These measures aim to protect Brazil’s steel industry from cheap imports, primarily from China. In 2023, Brazil imported steel products worth R$8.96 billion ($1.6 billion), with China accounting for 83% of those sales. The influx of cheaper steel has led to increased idle capacity in the domestic industry.

The Brazilian steel industry has faced challenges due to the surge in imports. Steel imports to Brazil increased by 25% year-on-year in the first quarter of 2024. This has resulted in capacity utilization rates of only 60-65% over the past year for domestic producers.

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While these measures are expected to provide relief to domestic steelmakers, concerns exist about potential impacts on steel-consuming industries and consumer prices. However, the government maintains that technical studies show the measure will not affect consumer prices or downstream product prices.

The new import regulations will take effect within 30 days after approval by Brazil’s tax authorities and Mercosul partners. The system will remain valid for 12 months, during which the market will be closely monitored. The government expects this decision to reduce idle capacity in the domestic steel industry and preserve jobs.

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