US Imposes 25% Tariff on Brazil Goods, but Exempts
Pig Iron and Steel Scrap Pig iron from Brazil has been exempted from the USA decision to impose a 25% tariff on nearly all imports from Brazil after a year-long Section 301 investigation, according to a Federal Register notice published by the Office of the US Trade Representative (USTR) on Thursday. This follows a Wednesday night directive from President Donald Trump, but the broader 10% tariff on pig iron under Section 232 remains in force. Steel scrap was also determined to be exempt in the Section 301 decision.
The debate around increasing tariffs on Brazilian pig iron effectively pitted Cleveland-Cliffs, which had supported tariffs totaling 37.5%, against EAF producers—principally SDI, whose Barry Schneider, president and COO testified last week in front of the USTR’s Section 301 committee.
“Raising the (pig iron) tariff above the current 10 percent would reduce the competitiveness of American steelmakers without improving US trade relationships,” Philip Bell, president and CEO of the Steel Manufacturers Association, told WSD.
In the Federal Register notice, USTR explained: “With respect to pig iron, historically, more than 95 percent of domestic pig iron production is consumed internally by US integrated steel producers, meaning that iron foundries (like electric arc furnace steel producers) are reliant on imported pig iron.” USTR added: “Commenters also noted that other third-country sources of pig iron were limited given that China consumes virtually all of the pig iron it produces, and supply from Russia and Ukraine has been affected by the Russia Ukraine war.”
The USTR did acknowledge that “some commenters advocated for tariffs on pig iron—suggesting that the United States has the raw materials and production capacity to replace imported pig iron from Brazil. However, very little domestically produced pig iron is currently sold in the US market, so imports from Brazil are important to satisfy US demand.”
Regarding the exemption of iron and steel waste and scrap, USTR said: “Like other products already proposed for exemption, iron and steel waste and scrap is an important input for carbon and alloy steel production, and there is no viable domestic supply for this product.”
In fact, there were several other goods exempted—including iron ore pellets—according to the annex published in the Federal Register. Among those: aluminum hydroxide, antiques and art, animal hides and leather, certain seafood, additional pharmaceutical ingredients, wood products, organic honey, unflavored instant coffee, green and roasted coffee, orange juice, beef cuts, and used clothing.
Late Wednesday on X, Secretary of State Marco Rubio posted: “Today, President Trump directed USTR to impose a 25% tariff on most Brazilian imports. Let there be no confusion about why: President Lula and his government have not negotiated with the US in good faith. His economic policies are bad for Americans and bad for Brazilians. For the past year, Lula has put his own ego ahead of making a deal for the welfare of the Brazilian people, and these tariffs are the price for that.”