WASHINGTON • US President Donald Trump said yesterday he would restore tariffs on US steel and aluminium imports from Brazil and Argentina, surprising officials in the two countries and prompting them to seek explanations.
Emerging market stocks and the Mexican peso slid to session lows following Mr Trump's vow, which came in an early morning post on Twitter that gave no other details on the planned trade action.
"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," he wrote.
Brazil's President Jair Bolsonaro, an avowed Trump fan who has actively sought closer US ties, said in local radio interview that he did not think Mr Trump's decision was a form of retaliation. "I'm going to call him so that he doesn't penalise us," Mr 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."
Argentine Production Minister Dante Sica said the announcement was "unexpected" and he was seeking talks with US counterparts.
Mr Trump yesterday 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," he tweeted. "Lower Rates & Loosen - Fed!"
Mr 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 central banks. The US central bank's policymaking committee holds its next meeting on Dec 10 and 11.