Brazilian Steel Stocks Decline After Government Renews Tariff System

Brazilian steel companies' shares fell after the government renewed a tariff system for 12 months, which steelmakers have criticized as ineffective. The quota system allows imports of steel products if they pay a tax of 9-16% or a 25% tariff if the import quota is exceeded. Shares of CSN, Usiminas, and Gerdau dropped 4.4%, 3.6%, and 1.2%, respectively. Steel imports rose 27.5% YoY in the first four months of 2025, reaching 2.2 million metric tons.

Stocks of Brazilian steel companies plummeted on Wednesday following the government's announcement to renew a tariff system for 12 months. The quota system, designed to protect the national steel industry, has been criticized by steelmakers for being ineffective in controlling the flow of imports, particularly from China.

Under the system, as long as the import quota is not reached, steel products can enter the country if they pay an import tax ranging from 9% to 16%. If the cap is exceeded, a 25% tariff applies. The government's decision to renew this system has drawn criticism from the steel sector, which has urged the government to include all steel products in the 25% tariff, similar to the policies implemented by the European Union and the United States.

On the first day of trading following the announcement, shares of Companhia Siderurgica Nacional (CSN), Usiminas, and Gerdau fell by 4.4%, 3.6%, and 1.2%, respectively. Brazil's benchmark stock index, Bovespa, dropped by only 0.5% during the same period.

The quota system, which has been expanded to include 23 steel products, has been criticized by the sector for being too broad. The government's decision to retain the exclusion of imports from countries with trade agreements or special conditions with Brazil further adds to the industry's dissatisfaction.

Steel imports in Brazil have been on the rise, increasing by 27.5% year-on-year in the first four months of 2025, reaching 2.2 million metric tons. This surge in imports has put additional pressure on the domestic steel industry, which has been advocating for more stringent tariff measures to protect its interests.

The steel sector is calling for the government to renew the scheme with the inclusion of all steel products in the 25% tariff, as the European Union and the United States have done. The industry hopes that this change will help to better control the flow of imports and provide a more level playing field for domestic steel producers.

References:
[1] https://www.marketscreener.com/quote/index/BRAZIL-IBOVESPA-7656/news/Brazilian-steel-companies-shares-fall-after-government-renews-tariff-system-50090867/
[2] https://www.reuters.com/markets/commodities/brazilian-steel-companies-shares-fall-after-government-renews-tariff-system-2025-05-28/
[3] https://www.tradingview.com/news/reuters.com,2025:newsml_L6N3S00KN:0-brazilian-steel-companies-shares-fall-after-government-renews-tariff-system/