Brazil's Tussle Over U.S. Steel.(Brief Article)(Interview)

NEWSWEEK talks with Brazil's Trade and Development Minister Sergio Amaral

Brazil and the United States have long cooperated closely in the hemisphere, whether it means stamping out money laundering or building better school systems. The two continental economies have also prospered together; two-way trade in everything from soybeans to software reached $27 billion last year. But lately the friendship has been showing some strain. Not least because of Washington's new set of trade restrictions, imposed last March, to protect American farms and heavy industry. One of the sorest subjects: the 8 percent to 30 percent tariffs, and stricter quotas, on 16 different U.S. steel products. A chorus of nations cried foul, and few more strenuously than the Brazilians. In a recent interview in Brasilia, Trade and Development Minister Sergio Amaral explained why to NEWSWEEK's Mac Margolis.

MARGOLIS: Are the United States and Brazil at war on trade?

AMARAL: No, but we need to treat trade matters objectively. We are competitive. We do not have subsidies on exports. There's been no surge in Brazilian exports to the U.S. market. I know of no grounds to justify the United States' applying safeguards against us. And yet we are looking at a large potential loss of trade, and we have to evaluate this to decide whether this merits a stronger recourse.

How do the recent U.S. trade restrictions affect Brazil?

We will lose $92 million a year in direct sales of [finished] steel goods. We also will have to forgo around $1 billion in expected sales of semifinished steel to the U.S. market over the next three years. This is a sizable loss.

Do you anticipate a chain reaction to the U.S. trade measures around the world?