To be sure, the US and Argentina have never had a particularly warm relationship. I for one recall the many “Yanqui go home” insignia spray painted into historic buildings downtown when former President Barack Obama came to visit in March 2016, and to which I will respond – I will leave when I’m good and ready. But the year is 2018 and it’s a different era- with two very different heads of state- and there are signs of an international “trade war” brewing.
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!
— Donald J. Trump (@realDonaldTrump) 2 de març de 2018
In the US, there have been long-standing drip-dripping rumors about tariffs on steel and aluminum for nearly eight months. Indeed, it plays perfectly into the portfolio of a (North) “America First” plan for President Trump’s protectionist agenda. As the Bubble previously reported last week, Trump announced he was going to create a 25 percent tariff on steel and 10 percent tariff on aluminum imports.
The announcement stems from a US Department of Commerce report that recommended a limit on the metals under an obscure commerce provision which rationalizes the changes as part of “national security.”
On Friday Commerce Secretary Wilbur Ross, in a meme-inspiring interview with CNBC, pushed back on fears of retaliation (read: war), stating it was all “scare tactics.” White House National Trade Council Director Peter Navarro told CNN that actions are expected to take place as soon as the end of the week, with steel and aluminum tariffs across the board: “no country exclusions.”
By Sunday however, Secretary Ross waded into a gray area when he told Meet the Press that “whatever his [Trump’s] final decision is, is what will happen” – which seems a bit like word salad. He said that he has no reason to believe Trump might change his mind, but the opposition to these future decisions has been fierce both within the US and abroad.
What Does This Mean for Argentina?
Since the announcement, the European Union, Canada, Mexico, and China have all come out against these pending issues. Argentina has not made any such comment, and perhaps for good reason: its trade deficit with the country. Benjamin Gedan of the Wilson Center’s Argentina Project told us that the “U.S. tariffs on Argentine aluminium would be another body blow to the Argentine economy.”
US Trade Representative data shows that Argentina brought in US $332 million in aluminium sales to the US in 2016, denoting one of the top categories for the country. In total, Argentine aluminum represents 4 percent of the total US imports of the metal. According to Gedan, “given the impacts of the drought on Argentina’s breadbasket, aluminum tariffs would be highly unwelcome in Buenos Aires.”
— FrontierStrategyGrp (@FrontierStrtGrp) 2 de març de 2018
As Infobae explains, a significant amount of Argentine metal is exported to the US. Of Aluar’s aluminum exported products, 70 percent go to the US. Of the steel tubes exported by Siderca, around 54 percent go to the US. Both Siderca and Aluar are awaiting official decisions from the White House before launching any legal or diplomatic actions.
President Macri is placed in a precarious situation and may have to play some three-dimensional chess. Macri recognizes the importance of a cordial relationship both politically and financially with the US, and playing off of a personal relationship through their respective family businesses has got the presidents thus far.
However, as Gedan puts it “the Trump administration flatters President Macri to no end, but its ‘America First’ approach offers no special treatment for Argentina.” As Macri brands himself a regional leader, there will come a time that he must stand up for Latin American interests. For now, he too is awaiting an official decision.
To continue with a series of unfortunate events…
Despite sipping on Malbec at the Argentine embassy’s reception for the new ambassador, Secretary Wilbur Ross issued a statement at the end of February affirming the biodiesel tariffs against Argentina. At the reception, he noted a willingness to “try” to make something work – fast forward to the recent statement which echoes a similar sentiment from WH adviser Navarro saying, “While the United States values its relationship with Argentina, even our closest friends must play by the rules.” The Commerce Department claimed it has determined that exporters from Argentina have sold biodiesel “at 60.41-86.41 percent less than fair value.” The Argentina Project has indicated that this decision jeopardizes more than US $1billion (with a b) in revenue.
As the Trump administration moves to reduce steel and aluminum imports, #Argentina will again suffer from rising U.S. protectionism. It has already lost access for biodiesel (>$1 billion). In 2016, its aluminum sales to the U.S. were valued at $332 million.
— Argentina Project (@ArgentinaProj) 1 de març de 2018
Argentine Ambassador to the US, Fernando Oris de Roa has vowed to take the US to the World Trade Organization courts, as part of a “more mature relationship.” Oris de Roa has been doing his part, diligently meeting with representatives in Congress, including the House of Representatives’ bipartisan Argentina Caucus which now has 11 members.