Latin America Tests Economic Ties with China by Imposing Tariffs on Steel Imports

In recent weeks, a notable shift has emerged in the economic landscape of Latin America. Following the lead of the US and Europe, several Latin American nations are imposing prohibitive tariffs on Chinese imports, particularly steel products. This development marks a significant strain in what has traditionally been a cozy relationship between the region and the Asian superpower.

Mexico, Chile, and Brazil have recently hiked—and in some cases more than doubled—duties on steel imports from China. Colombia is also poised to follow suit. These moves may appear unexpected given China’s deep economic entrenchment in Latin America over the past few years. China has not only become the region’s largest buyer of raw materials but also a major investor. Concurrently, Latin America has provided China with an alternative market to sell its goods amidst stiff tariffs from the US and Europe. According to the regional steel association Alacero, China now sends nearly 10 million tons of steel annually to Latin America, a substantial increase from just 80,500 tons in 2000, valued at $8.5 billion.

This flourishing relationship is now under pressure due to a global pivot towards protectionism and the influx of Chinese imports, which jeopardize local steel producers and risk the livelihoods of 1.4 million workers in the region. The surge in Chinese steel exports, reaching 26 million tonnes in the first quarter of this year—the highest since 2016—has exacerbated the situation as prices slump.

“This is an important test of China’s interests and intentions,” said Margaret Myers, director of the Asia and Latin America Program at the Inter-American Dialogue. “It’s also a test of Latin American resolve in challenging what is a critical economic partner.”

Brazil’s response includes the imminent introduction of a tariff-rate quota system aimed at curbing the predatory pricing of imported alloy. Although the official announcement did not specifically mention China, insiders attribute the measure to last year’s 62% surge in Chinese shipments to 2.9 million tons. Marco Polo de Mello Lopes, head of industry association Aco Brasil, noted, “It’s a sign to the world that Brazil has rules—it’s not a no man’s land.”

However, pushing back against China carries significant risks, especially for smaller, export-driven economies that depend on Chinese demand for their raw materials, ranging from cherries to copper. History has shown that Beijing can swiftly retaliate against what it perceives as unfair measures. For instance, China briefly banned soybean imports from Argentina in response to anti-dumping measures and blocked canola shipments from two Canadian companies following the 2018 arrest of a Huawei executive in Vancouver.

The evolving dynamics between Latin America and China will undoubtedly test the resilience and strategic resolve of both sides as they navigate this new era of economic protectionism.