U.S. Markets close in 3 hrs 19 mins

Trump Steel Tax Has Brazil Worried About U.S. Keeping Beef Ban

Rachel Gamarski, Mike Dorning and Tatiana Freitas

(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. 

Worsening trade tensions may delay the removal of U.S. barriers on imports of Brazilian fresh beef, people familiar with the matter said.

President Donald Trump’s decision to reinstate tariffs on Brazilian steel and aluminum, which took the government of Jair Bolsonaro by surprise, poured cold water on Brazilian expectations the U.S. would soon resume imports of fresh beef from the South American country, according to the people who asked not to be identified because talks aren’t public.

Despite the good relationship between the two leaders, Brazilian government officials don’t expect the U.S. to ease imports of agriculture products in an electoral year in the U.S., the people said. The Agriculture Ministry didn’t immediately respond to a request for comment.

On Monday, Trump accused Brazil and Argentina of cheapening their currencies to the detriment of U.S. farmers. Brazil’s government, which has aligned itself heavily with the U.S., has denied it’s weakening the real, with Economy Minister Paulo Guedes calling Trump’s move a terrible mistake.

In addition to the deteriorating political mood, U.S. food safety concerns about Brazilian beef remained after American inspectors visited meat plants in June, one of the people said. After the audit, the U.S. decided to keep the ban and requested corrective actions to Brazil.

The U.S. Department of Agriculture’s Food Safety and Inspection Service said in a response to questions that it will review documents on corrective actions once they are submitted, and then it will conduct “another on-site verification audit of the Brazilian meat inspection system.”

The White House’s press department referred a request for comment to the U.S. Trade Representative, which didn’t immediately respond to messages left by email and telephone.

The U.S. suspended fresh-beef imports in 2017 after finding meat containing blood clots and lymph nodes. Brazil said the findings were abscesses stemming from a reaction to components of a foot-and-mouth disease vaccine. After the episode, the South American nation reduced the vaccine dose and changed the product’s compound.

Last month, an official from the Agriculture Ministry said Brazil was “100% confident” that the U.S. would remove the ban on the nation’s fresh beef. At the time, Agriculture Minister Tereza Cristina had said no date has been set, adding that Brazil had provided additional responses to the U.S. and was awaiting its analysis of the answers.

--With assistance from Mario Parker.

To contact the reporters on this story: Rachel Gamarski in in Sao Paulo at rgamarski@bloomberg.net;Mike Dorning in Washington at mdorning@bloomberg.net;Tatiana Freitas in São Paulo at tfreitas4@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Julia Leite

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.