Brazil makes concessions for U.S., despite cuts on Brazilian steel quotas

Traditionally, Brazil’s trade policy — along with almost all dealings with foreign countries — has been based on the principle of reciprocity. Raise tariffs on Brazilian goods? Expect the same to happen in return. However, this long-held credo is being cast aside during the Jair Bolsonaro government, with the Foreign Affairs Ministry led by anti-globalist Ernesto Araújo happy to make concessions to Donald Trump’s U.S. As we explained in this morning’s Daily Briefing, Mr. Araújo is pushing for a 90-day renewal of Brazil’s tax-free quota for foreign ethanol, benefiting U.S. producers — just days after Donald Trump’s White House imposed reduced import quotas on Brazilian semi-finished steel.

According to President Trump, the measure came as a result of the slowdown of the U.S. steel industry, due to the dwindling demand during the coronavirus pandemic. Brazil’s Foreign Affairs Ministry says it is confident quotas will be lifted as economic conditions improve.

Import quotas allow Brazilian producers to sell their products to the U.S. tariff-free up to a given volume. Since 2018, the U.S.’s steel and aluminum import tariffs have risen to 25 percent, going against the rules of the World Trade Organization (WTO).

In justifying the measure announced on Friday, Mr. Trump proclaimed that shipments of steel from domestic producers fell 15 percent in the first six months of the year, and that the capacity utilization rate of U.S. firms in the sector was...