Brazil Protects Domestic Trade, Slaps Steel Tariff On Chinese Products

China has been the target of many countries, as the Asian powerhouse has been blamed for hurting domestic industries. According to the China Iron & Steel Association, "China has received some 400 trade remedy cases from developing countries like Argentina, Mexico, Brazil, Turkey and India since early this year, involving antidumping, countervailing probes and safeguard measure against a wide range of Chinese-made imports from electric fans, electric heaters, stainless steel cutlery, seamless pipe, steel nails to glyphosate."

Now countries are taking measures to protect themselves against the giant. A recent Bloomberg's article said Brazil has decided to implement anti-dumping duties on certain Chinese steel products. There will now be an anti-dumping duty of $743 per ton on Chinese steel pipes. This tariff will be valid for five years. Brazil's government implemented this levy once it saw increased steel tube imports from China that were underpriced and putting pressure on the local industries. This steel tube is especially important to Brazil as it is used by the oil and gas industries.

To further protect their own country, Brazil's President Dilma Rousseff has enacted a rule where "the government can apply its anti-dumping tax retroactively 90 days before the a preliminary ruling on whether the price of the imported product costs less than it would in its country of origin."

Under the Mercosur trade agreement, air conditioners, bicycles, and five other products have now been added to the list of goods subject to these new tariffs. This means companies receiving Chinese products underpriced will be subject to scrutiny for stocking up on these imported goods that are threatening Brazil's industry. Foreign Trade Secretary Tatiana Prazeres said, "Almost half of the 81 anti-dumping measures taken by Brazil are against Chinese products."

Brazil has also experienced economic problems as their currency keeps rising, making it expensive for other countries to buy products from them. In a Reuters' article, "Finance Minister Guido Mantega said last week that Brazil would fight back against any new round of quantitative easing in the United States by taking fresh measures to protect its currency."

Paul Shellman, Consultant to Wainscott Commodities, will be speaking about commodities and the China factor at our Construction & Steel Summit conference on October 10, 2011. If you are interested, Click Here for more details on this conference.