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Brazilian companies promote U.S. plants, leaning into Trump trade wars

2 of Brazil's. most significant commercial firms, steelmaker Gerdau and. plastics manufacturer Braskem, are currently promoting their. substantial U.S. operations as a hedge versus the danger of. protectionism from Presidentelect Donald Trump.

Trump has actually floated the idea of a 10% or greater tariff on all. goods imported into the United States, a relocation he states would. eliminate the trade deficit, while threatening a 200% tariff on. some imported cars, especially from Mexico.

On calls with financiers today, Gerdau and Braskem were. quick to point out that a large chunk of their services are. located in the United States, positioning them to actually enhance. earnings if those policies take effect.

Gerdau's Chief Financial Officer Rafael Japur told an. incomes call that Trump's steps are anticipated to be positive. for U.S. steel demand, helping its steelmaking plants there.

The Brazilian steelmaker, which runs 11 long and unique. steel production units in the U.S. and Canada, also promoted the. benefits of a stronger dollar for its Brazilian operations,. where it would take on more costly imports.

Gerdau shares leapt in Sao Paulo on the U.S. election. outcomes, surpassing peers with more direct exposure to the Brazilian. market such as Usiminas and CSN.

Following Trump's success, we see Gerdau as a key. beneficiary in the area, experts at BTG Pactual stated in a. note to clients, including that the Republican politician's trade policy could. imply a stronger-for-longer pricing environment.

Trump's protectionist method and concentrate on bolstering U.S. industry would even more suppress direct and indirect steel imports,. the analysts stated, keeping in mind that potential business tax cuts. might likewise support Gerdau's financial efficiency.

Petrochemical producer Braskem, which is owned by state-run. oil giant Petrobras and engineering group Novonor as. significant shareholders, might likewise gain from Trump's policies.

Braskem CFO Pedro de Freitas told reporters on Thursday that. it was a crucial domestic provider of polypropylene to the U.S. automotive market, which stands to gain from Trump's. protectionism.

Braskem has five polypropylene plants in U.S. states from. Pennsylvania and West Virginia to Texas - all of which threw. their support to Trump in his election win against Democratic. Vice President Kamala Harris this week.

The U.S. represent 15% to 20% of Braskem's core profits,. Freitas stated.

Both Braskem and Gerdau likewise urged Brazil to lean into what. might be a brand-new trade war, imposing tariffs to secure the. Brazilian market in the face of U.S. protectionism.

Brazilian steelmakers have long prompted the federal government to. impose taxes to fight what they consider disposing practices. from Chinese suppliers who have flooded the market with cheap. items. Last month, Brazil's government responded with approximately. 25% import tariffs.

Gerdau CEO Gustavo Werneck said those tariffs should increase to. a minimum of 35% as steel that was being offered to the U.S. may now. be directed to other areas, consisting of Brazil. China has. managed to offer steel to Brazil even with the 25% levy, he stated.

Braskem's Freitas had a comparable view.

If the U.S. is more closed, those who were selling there. will sell in other places - and products will concern Brazil, he. stated.

New tariffs in Brazil must use Braskem some short-term. aid, experts say, pointing to the increase in the import tax. for polyethylene, polypropylene and PVC from 12.6% to 20%.

(source: Reuters)