Steel and Aluminum Industries Seek Export Quotas

It is still too early to assess the full impact of the U.S. government’s decision to impose a 25% tariff on imported steel and aluminum. Executives from both sectors acknowledge uncertainty and concern and report seeking flexibility in the measure through the Brazilian government.

“Initially, the new tariffs apply equally to all countries and do not change the overall competitiveness landscape. But that situation won’t last,” said Marco Polo de Mello Lopes, Executive President of Aço Brasil, the Brazilian Steel Institute. “Several countries are negotiating new terms in Washington. Those who strike deals faster will gain an advantage. If we’re slow, we’ll lose ground.”

The UK and the U.S. have already announced an agreement to reduce steel tariffs, although details have not been disclosed.

The U.S. is the main international destination for Brazilian steel and the second largest for aluminum. In 2024, Brazil exported 4.08 million tons of steel to the U.S., accounting for 42.6% of its total steel exports and earning USD 2.99 billion, or 39.2% of Brazil’s steel export revenues. Brazil was the second-largest steel exporter to the U.S., behind only Canada.

The main item exported was semi-finished steel, which brought in USD 2.3 billion. This type of steel is not sold directly to consumers but is used as an input in steel production, which involves rolling and resale. “By taxing semi-finished steel, the U.S. reduces the competitiveness of its steel industry,” Lopes noted.

The U.S. is not self-sufficient in semi-finished steel, requiring about 5.6 million tons in annual imports. Building mills to meet this demand would take between three and four years.

Regarding the steel trade balance, Brazil imports metallurgical coal from the U.S. (USD 1.4 billion in 2024) and USD 3.9 billion in machinery and equipment, including a high volume of embedded steel. “Considering the entire supply chain, the U.S. has a trade surplus with Brazil,” the Aço Brasil executive emphasized.

In 2018, during Trump’s first administration, a 25% tariff was imposed on imported steel and aluminum. At the time, Brazil successfully negotiated a “hard quota” policy with the U.S.: the country was allowed to export up to 3.5 million tons of semi-finished steel and 687,000 tons of flat products per year tariff-free, but exports beyond this limit were prohibited—even with extra tariffs. This agreement remained in place until March 2025.

“The current demand from the Brazilian steel industry is for the return of this hard quota system,” said Lopes. Negotiations began in March with a videoconference between Brazil’s Vice President and Minister of Development, Industry, Trade and Services, Geraldo Alckmin, U.S. Secretary of Commerce Howard Lutnick, and U.S. Trade Representative Jamieson Greer.

Tatiana Prazeres, Brazil’s Secretary of Foreign Trade, explained that the initial step is to clarify Brazil’s tariff policy to the U.S. and present arguments in what is expected to be a slow and difficult negotiation process. “We’ve shown that Brazil is not a problem for the U.S. They have a trade surplus with us,” she said. “For eight of the ten main items we import from the U.S., our import tariff is zero.”

Regarding the new steel and aluminum tariffs, the strategy emphasizes Brazil’s importance to the U.S. supply chain, as highlighted by Lopes. “We are working in coordination with the private sector. We want a win-win relationship with the U.S.,” Prazeres added.

The Brazilian aluminum industry is also calling for replacing the 25% tariff with a quota system that would allow annual volumes to be exempt from the surcharge. “That is our main proposal,” said Janaina Donas, Executive President of the Brazilian Aluminum Association (ABAL).

In 2024, the U.S. received 16.8% of Brazil’s aluminum exports, totaling USD 267 million and 72,400 tons, representing less than 1% of U.S. aluminum imports. The main items shipped were aluminum sheets and coils.

In the first quarter of 2025, Brazilian aluminum exports to the U.S. rose 22% in volume compared to the same period in 2024, reaching 22,200 tons. “This growth reflected a rush to ship products ahead of the expected implementation of the new tariff,” Donas explained. Until March, a 10% tariff was in effect on exports to the U.S.

According to Donas, the U.S. is not self-sufficient in primary aluminum production derived directly from bauxite. She estimates the country would take five to eight years to establish sufficient domestic capacity.

Brazilian producers’ main concern is that the new U.S. tariffs could trigger trade diversion. This means that countries previously supplying the U.S. might redirect exports to less protected markets, such as Brazil, often using unfair trade practices like dumping. “Brazil needs to strengthen its trade defense instruments,” Donas warned.

Prazeres confirmed that the Brazilian government is closely monitoring trade diversion risk and conducting a thorough review of product flows, and it is ready to take action if necessary.

Source: Valor Econômico

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