Latin American Nations Raise Tariffs on Chinese Goods

Industrials Author: Notrice May 23, 2024 05:57 PM (GMT+8)

EqualOcean has learned that in recent weeks, Mexico, Chile, and Brazil have all raised tariffs on Chinese steel products, in some cases more than doubling them. Colombia may also implement similar measures.

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In recent years, China has solidified its position in the Latin American market, becoming the region's largest buyer of raw materials and a major investor. According to data from the Latin American Steel Association (Alacero), China exports nearly 10 million tons of steel worth approximately USD 8.5 billion to Latin America annually. In 2000, this figure was only about 80,000 tons. As China faces high tariffs from the US and Europe, Latin America has provided an alternative market for its products.

However, with the rise of global trade protectionism, some Latin American countries are concerned that the influx of Chinese steel poses a threat to their domestic steel industries. This situation is testing the relationship between China and these countries. Brazil is set to implement a tariff quota system to curb low-priced alloy imports. Although the official announcement did not specifically mention China, insiders revealed that a 62% surge in Chinese steel exports to Brazil last year, reaching 2.9 million tons, prompted this decision.

Experts suggest that Latin American tariffs on Chinese goods are a significant test of China's interests and strategies, as well as of Latin America's willingness to challenge this key economic partner. From some perspectives, the reactions of these developing countries to Chinese products better reflect global trade sentiment towards China. This indicates that trade protectionism against Chinese goods is rising in many places, not just in wealthy nations.

Imposing tariffs on Chinese goods could entail risks, particularly for smaller export-driven economies that rely on Chinese market demand. China has often retaliated against what it views as unfair unilateral trade measures by banning imports of certain goods and suspending investments.

Analysts believe these Latin American countries might be betting that China will not retaliate against their tariff strategies, given that Latin American imports of Chinese steel account for only about 1% of China's production, potentially lowering the risk of provoking China.