U.S. President Donald Trump announced on Monday that he will impose tariffs on steel and aluminium imports from Brazil and Argentina.

He claimed the development comes as those countries’ weak currencies had hit U.S. food exporters hard.

Mr Trump noted: “Brazil and Argentina have been presiding over a massive devaluation of their currencies, which is not good for our farmers.”

In response, Brazil's President Jair Bolsonaro said he would hold discussions with his American counterpart. He said: “Their economy is not comparable with ours, it's many times bigger. I don't see this as retaliation. I'm going to call him so that he doesn't penalise us. Our economy basically comes from commodities, it's what we've got.”

In the first 10 months of 2019, Brazil exported $2.2bn of steel and iron to the U.S., representing 9% of its total exports to the country. 

“Brazil will be in a very tough spot because if they do accept Trump’s terms, which I think they won’t, it would involve a voluntary export restraint of some kind, which is not something Brazil does,” said Monica De Bolle, a senior fellow at the Peterson Institute for International Economics in Washington. “If they did it will hurt its relationship with China.”

Argentina’s steel and aluminium exports account for about 3% of the country’s total exports, which are dominated by agricultural goods.

Asian stocks dipped on Tuesday on the tariffs development. MSCI’s broadest index of Asia-Pacific shares fell 0.43% and Australian stocks suffered a 2.2% fall, the worst knockback in two months.

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