President Trump announced that Washington would be placing tariffs on steel and aluminium imports from Argentina and Brazil, denouncing the countries for devaluing their currencies, and consequently hurting American farmers. Exports from both countries have become cheaper and more competitive due to their dwindling currencies. The Brazilian real has slumped amid interest rate cuts, rising political tensions, and weakness in emerging markets. Similarly, the Argentine peso has plummeted against the dollar, as capital controls were imposed and markets were rattled by the return to a populist government, along with the country’s long-standing debt burden.
President Trump’s decision ramps up trade tensions with the Latin American countries and deteriorates bilateral relations. The re-imposition of tariffs has surprised officials in Argentina and Brazil and has prompted them to arrange a discussion of the decision with President Trump. President Trump is largely concerned about other countries gaining an economic advantage by devaluing their currencies, and has urged the Federal reserve to weaken the dollar. All eyes will be on the Federal Reserve when they are set to meet on December 10th, 2019, to discuss policy going forward.