Market drops after’s Trump’s new tariffs on Brazil and Argentina

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According to Reuters, stocks will open lower Tuesday because of Trump’s new tariffs imposed on both Argentina and Brazil.

Asian shares tumbled on Tuesday after U.S. President Donald Trump stunned markets with tariffs against imports from Brazil and Argentina, recharging fears about global trade tensions, while weak U.S. factory data added to the investor gloom.

Contrary to his remarks, both Brazil and Argentina have been trying to strengthen their respective currencies against the dollar.

In fact, the opposite is true: Both countries have actively been trying to strengthen their respective currencies against the dollar. Analysts said the origin of Trump’s decision may lie in the domestic political consequences of his China trade war. 

U.S. farmers represent a key demographic for Trump ahead of the November 2020 election, and they have watched in vain as the trade dispute has hurt the competitiveness of U.S. agricultural products, allowing their Brazilian and Argentine peers to get rich off China. 

“For many Brazilians, this smells like revenge for their country’s soybean farmers bonanza – they have benefited enormously from the U.S.-China trade war by replacing U.S. soybeans sales into China,” said Kim Catechis, head of investment strategy at Martin Currie.

REUTERS:

Formal notices of the tariffs were not immediately announced by the Treasury or Commerce Departments or the Office of the US Trade Representative.

Both Brazil and Argentina were exempted from 25% steel and 10% aluminum tariffs last year when Trump was attempting to avoid a trade war with those countries. Brazil’s President, Jair Bolsonaro, said Monday that he has an “open channel” of communication with Trump, according to state news agency Agencia Brasil.

CNN:

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