Features

Pig iron showdown as Trump puts BRICS to the wall?
Written by Stephen Miller
December 4, 2024
The BRICS countries of Brazil, Russia, India, and China, and South Africa met last month, along with several other associated nations. Among the topics discussed was the potential establishment of an alternative world currency to compete with the US dollar. It is unclear how far along this endeavor has come. The Chinese yuan has already been approved by the International Monetary Fund (IMF) as an accepted settlement of international business transactions. But its use is nowhere close in use to the dollar. However, many of the attendees at the BRICS meeting voiced skepticism about this, citing US retaliation, among other concerns.
President-elect Donald Trump, so as not to disappoint their fears, later announced the US would levy tariffs of 100% on all imports from BRICS countries unless they ceased supporting an alternative currency. There were no further details given along with this threat.
Existing tariffs
There are already a host of tariffs and trade restrictions on China and Russia, but not so on Brazil and India, except for the Section 232 steel and aluminum tariffs and quotas. Looking where the US steelmakers and foundries source pig iron, these countries basically supply all of US pig iron imports aside from the small amounts we still receive from Ukraine.
Mutually assured destruction?
SMU reached out to a player in the Brazilian pig iron trade to get his reaction.
He said, “This kind of measure, at the market we now have, would harm both sides badly.” He shared a few facts to prove his point.
In 2023, Brazil exported 2.8 million metric tons of pig iron to the US. This accounted for 85% of US pig iron imports. The quantity was also responsible for 65% of all Brazilian exports to the US.
“I do not see, on short notice, anywhere being able to substitute for this quantity,” he added.
This is definitely the case if India is sanctioned since they have become an additional supplier to the US, as weakness still is depressing prices in South Asia.
This article is just about pig iron. There is a multitude of imported products that would be affected by a threat like this. Let’s hope the unintended consequences of broadening tariffs can be managed so they cause limited damage to the US economy.

Stephen Miller
Read more from Stephen MillerLatest in Features

Final Thoughts
If I could change something, it’d be this: Political news would get more boring. And news about steel prices and steel demand would get a little more exciting.

US and Canada expect positive outcomes from tariff negotiations
Canadian Prime Minister Mark Carney and US President Donald Trump told reporters at the White House on Tuesday that they’ll be formulating a trade deal that works for both nations.

Final Thoughts: Survey says edition
SMU’s latest survey results indicate that steel market participants think sheet prices are at or near a bottom. But most also think there is limited upside once they inflect higher.

SMU Scrap Survey: Current and Future Sentiment tick down
SMU’s Current Sentiment Index for scrap decreased this month, a move mirrored by our Future Sentiment Index, according to the latest data from our ferrous scrap survey.

Leibowitz: When the shutdown should end
There is no doubt that the current government shutdown reflects the vast divisions between the extremes of American politics, society, and even geography. Almost all Americans agree that government is necessary, but voters disagree...