Trade tensions between the US and Brazil are escalating after both nations announced 50% tariffs on each other’s imports. The move has sparked concern in Brazil’s metals sector, particularly in mining, steel, and aluminum.

The US, citing national security under Section 232 of the Trade Expansion Act, began imposing a 50% tariff on Brazilian steel and aluminum products as of June 4. In response, Brazilian President Lula announced equivalent retaliatory tariffs on American goods.

Brazil is the second-largest steel exporter to the US and the top global exporter of iron ore. It also ranks as the third-largest supplier of metallurgical coal to the US and the largest source of semi-finished steel, accounting for 60% of US imports in that category.

Industry participants in Brazil warn that the trade dispute could severely impact exports and key supply chains.