Measure will last 12 months; items used to store food were preserved from the increase in the tax rate
Gecex-Camex (Executive Management Committee of the Chamber of Foreign Commerce) approved this Tuesday (April 22, 2024) the increase in the import tax on 11 types of steel products. With the decision, the rate for purchasing these items abroad is now 25%. Previously, tariffs ranged from 9% to 12.6%. Here is the full decision (PDF – 80.5 kB).
The government justified this increase in tax by the growth observed in the entry of foreign products into Brazil. Gecex-Camex determined that the new tariff will only be charged on products that exceed a quota of 30% above the average for purchases made between 2020 and 2022. The measure will come into force in 30 days.
The new import tariff on products that overcome this barrier is temporary and will last for 12 months. The request for an increase in rates came from national steel mills, which felt harmed by the increase in the entry of imported products into the country.
The companies asked the body linked to the Mdic (Ministry of Industry, Commerce and Services) to evaluate an increase in the rate of 31 items.
Among these 31 items, there were 2 that aroused concern due to the impact that a possible increase in the tariff would have on the price of the basic food basket. These are metal sheets used to store foods such as sardines, powdered milk, corn and others.
On April 16, Abeaço (Brazilian Steel Packaging Association) sent a letter to the Executive Secretariat of the Chamber of Foreign Commerce in which it expressed concern about the potential effects on the cost of the basic food basket if there was an increase in the rate. Read the full letter (PDF – 658 kB).
The government, however, did not change the rate of items that make up the basic food basket. The products that had an increase in tariffs were different types of coils (cold and hot), galvanized sheets, aluminum coated sheets and steel wires.
Gecex-Camex is still analyzing an adjustment in the rate of 4 products related to the steel industry. The government is studying the impacts that an increase in the tariff on steel pipes (welded, for oil pipelines, steel alloys) would cause on the national market.
In a conversation with journalists this Tuesday (April 23), the vice-president and minister of Industry, Commerce and Services, Geraldo Alckmin (PSB), declared that the government’s expectation is that, by establishing this ceiling of 30% above the average in recent years, there will be no major effects on the production chain of industries that purchase steel.
“We reduced it from 31 to 15 and then to 11 items and did a very careful job. We took the average of 2020, 2021 and 2022 and added an additional 30%. Up to this limit there will be no changes. If imports are 30% higher than this average, then the rate increases to 25%. Our analysis is that we will stay within this quota, without any changes”declared Alckmin.
DISPUTE FOR STEEL
Since the end of 2023, Brazilian steel companies have been pressuring the government of President Luiz Inácio Lula da Silva (PT) for protectionist measures to curb imports of the product.
This movement made companies that buy steel also move to try to stop the increase in the tax rate. Steel product manufacturers argue that the price of steel in Brazil is already one of the most expensive in the world and that closing the import door will have catastrophic effects for the country.
O Power360 sought out the protagonists of this clash: Instituto Aço Brasil, on the side of the steel mills, and Abimaq (Brazilian Association of the Machinery and Equipment Industry), on the side of buyers, to understand whether the government’s decision was a victory for either side.
The president of Instituto Aço Brasil, Marco Polo, declared that the government’s decision left the steel mills satisfied. To the Power360the executive said that the idea of the tariff quota came from the steel manufacturers themselves and that its implementation is a great achievement to protect the Brazilian industry and curb imports “predatory”.
“It’s a victory because the Brazilian government signals to the world that Brazil is no man’s land, because until now foreign companies came here, threw volume, did whatever they wanted, attacked Brazilian industry, without having any sign of that this would change”said Marco Polo.
Abimaq did not respond to the digital newspaper until the publication of this report, but the space remains open.
TAXES ZEROED
The government zeroed the import tax on machinery and equipment for capital goods and information technology that are not manufactured in Brazil. In total, there were 225 items.
According to Alckmin, this decision is part of an effort to industrialize Brazil and accelerate the exchange of equipment in the national production chain.
