President Trump accused the countries of orchestrating a massive devaluation of their currencies and called on the US central bank to take action to prevent other nations from doing the same.

Steel coils lay in a yard at ArcelorMittal Dofasco steel plant in Hamilton, Canada. Canada hit back at the United States on June 29, 2018, with retaliatory tariffs on $12.6 billion in American goods. June 4, 2018.
Steel coils lay in a yard at ArcelorMittal Dofasco steel plant in Hamilton, Canada. Canada hit back at the United States on June 29, 2018, with retaliatory tariffs on $12.6 billion in American goods. June 4, 2018. (AFP)

The US will impose tariffs on steel and aluminium imports from Brazil and Argentina, President Donald Trump said in a tweet on Monday.

"Brazil and Argentina have been presiding over a massive devaluation of their currencies," he posted, adding this was hurting American farmers.

"Effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the US from those countries."

Trump also called on the Federal Reserve to "likewise act" so other nations no longer "take advantage of our strong dollar by further devaluing their currencies."

The Brazilian government said it's in touch with the US Trade Representative's office and other agencies about Trump's surprise decision, according to a source familiar with Brasilia's reaction.

The source, who was not authorised to speak publicly, rejected the US claim that the Brazilian government was manipulating its real currency, noting the central bank of Brazil had recently intervened to strengthen - not weaken - the real.

Debt and recession

Argentina is mired in an economic crisis underpinned by inflation, debt, widespread poverty and a plunging currency. President Mauricio Macri, who came to power in 2015 with promises to boost South America’s second-largest economy, was defeated in elections in October and will leave office next week.

Brazil is grappling with stubborn double-digit unemployment, and its economy is headed toward its third straight year of roughly 1 percent growth, following two years of deep recession.

Last year, Trump announced global tariffs of 25 percent on steel and 10 percent on aluminium but in March agreed to lift them for Argentina and Brazil, as well as a number of other countries initially included.

Referencing these tariffs in a subsequent tweet, the president claimed that US markets were "up as much as 21%" since then.

Fed cuts and trade wars

Trump has repeatedly assailed the Fed chairman, Jerome Powell, over his leadership and for not cutting interest rates as much as the Republican president would like.

At its most recent meeting in October, the Federal Reserve cut short-term interest rates for a third time this year to try to support the US economy. But it also signalled that it planned no further interest rate cuts absent clear evidence of a worsening US economic outlook.

Trump’s trade war with China hurt US farmers after Beijing retaliated when the president imposed levies on hundreds of billions of dollars of Chinese-made goods.

Trump falsely claims China is paying the US billions and billions of dollars in tariffs. He also has earmarked nearly $30 billion for farmers to help make up for their losses.

US steel producers have struggled since the Trump administration put global tariffs into place last year.

Domestic demand has slumped along with the energy sector as drillers pull back on purchases of steel pipe.

US Steel in its last quarter reported its first loss since early 2017, and the division that makes pipes for energy companies lost $25 million.

It has laid off workers and shut down some of its blast furnaces.

Shares of the Pittsburgh company are down 43 percent over the past year. Shares of AK Steel are down 10 percent, even as the S&P 500 sets record highs repeatedly.

Source: TRTWorld and agencies