en.Wedoany.com Reported - The Office of the United States Trade Representative (USTR) has proposed imposing a basic additional tariff of 25% on Brazilian goods, with the possibility of an additional 12.5% tariff, a move that would directly impact the raw material supply for US steel producers. Since pig iron for steelmaking is not included in the exemption list, the price increase of this imported raw material could raise US steel production costs and undermine the effectiveness of the Trump administration's policies supporting the domestic steel industry.
On June 1, the USTR, under Section 301 of the Trade Act of 1974, proposed a 25% additional tariff on Brazilian goods, citing certain Brazilian measures that restrict or distort US companies' access to its market. Another Section 301 investigation related to forced labor allegations could impose an additional 12.5% tariff, potentially stacking on top of the 25% basic rate. Industry representatives warn that since Brazil is the largest supplier of pig iron for steelmaking to the US, this move would harm domestic steel producers.
Philip Bell, President of the Steel Manufacturers Association (SMA), stated that a 25% tariff would cause non-competitive harm to domestic steel producers who are investing record amounts to improve efficiency. He noted that the US has almost no free market for pig iron, with producers either using it entirely or relying on imports. The SMA represents electric arc furnace producers, which account for over 70% of US steel output and typically use a mixture of scrap steel and pig iron for steelmaking as their primary raw material.
According to data from S&P Global Market Intelligence, the US imported 3.3 million tons of pig iron from Brazil in 2025, accounting for more than half of the total 5.3 million tons imported. Market participants estimate that the tariff increase on pig iron would raise steel costs and could offset the effects of previous protectionist measures. In June 2025, the Trump administration implemented a 50% steel tariff, which has already driven up prices: according to Platts data, the TSI US Hot Rolled Coil EXW Indiana index reached $1,140 per short ton on June 24, up 35.7% from $840 per short ton before the tariff was implemented.
A final decision on the new tariffs has not yet been made, and the USTR is in the public consultation and hearing phase. International trade lawyers state that such investigations typically take about a year, but final measures may be adjusted, suspended, or modified. US and Brazilian officials have held negotiations but have not yet reached a compromise. US steel industry representatives expect pig iron may be excluded from the new tariffs, as it has been exempted in similar previous cases.
For Brazil, the consequences could be severe. In 2025, approximately 83% (4.1 million tons) of Brazil's pig iron exports were destined for the US, with production mainly concentrated in the Sete Lagoas region (Minas Gerais state). According to international lawyers, the industry is extremely vulnerable: dependence on a single market makes it difficult to quickly shift to other supplies, with possible consequences including reduced profit margins, contract cancellations, and temporary production halts, similar to the situation in 2025 when a 50% tariff was discussed. Brazilian producers hope to obtain an exemption again and are actively seeking alternative markets, including the EU and Italy, where carbon regulations could enhance the competitiveness of Brazil's relatively low-carbon pig iron.
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