NOEL KING, HOST:
President Trump is reimposing tariffs on steel and aluminum imported from Brazil and Argentina. The president announced that news on Twitter this morning. NPR chief economics correspondent Scott Horsley is here to explain what's going on. Hi, Scott.
SCOTT HORSLEY, BYLINE: Good morning, Noel.
KING: OK, so Brazil and Argentina were exempted from steel and aluminum tariffs in the spring of 2018. What happened?
HORSLEY: In his tweets this morning, the president accused these two countries of what he called massive devaluation of their currencies. Cheaper currency does give these countries' exporters an advantage in international trade. And Brazil is a pretty big exporter of steel to the United States, Argentina less so. In his tweet, though, the president did not talk about that competition hurting domestic steelmakers. Rather, he referenced competition for U.S. farmers, who are obviously an important constituency of the president - political constituency. What's really been hurting farmers, along with some pretty bad weather, is the president's trade war with China. When China dialed back its purchases of U.S. soybeans, for example, during that trade war, it did look to countries like Brazil as an alternate source of supply.
KING: It seemed over the past few months that some of the tension over trade was cooling off. Were things not as they seemed?
HORSLEY: Yeah, you know, there had been some signs of progress. There's talk of a trade agreement being finalized with Mexico and Canada. There is talk about at least a mini trade deal with China. Investors on Wall Street have certainly embraced that, more or less pricing in the idea that trade peace could be close at hand. Now maybe that confidence was misplaced. You know, last week, I, spoke with a manufacturer in Minnesota who said that he's really being hurt by the tariffs - not just the cost but also the uncertainty. He said it's hard to make a decision or an investment when tariff policy can change with a tweet. And we got another reminder of that possibility this morning.
KING: Now, in those same tweets this morning, the president also asked the Federal Reserve to take action. He mentioned currency manipulation, currency devaluation in Argentina and Brazil. What does he want our central bank, the U.S. central bank, to do?
HORSLEY: He wants the Fed to act so that other countries can't - what he said - take advantage of the strong dollar. This is an interesting request because, ordinarily, it's the Treasury Department that steers U.S. currency policy, not the Federal Reserve. The central bank's mandate is stable prices and maximum employment, not driving down the dollar in an effort to boost exports. But the Fed does set interest rates. And, of course, that affects the value of the dollar. So in - what the president's really asking here in another set of words is what he's been asking for all along, which is for the Fed to lower interest rates even further. The central bank has already cut interest rates three times since July. And Fed officials are generally expected at this point to leave rates unchanged when they meet next week.
KING: Let me ask you to pull back 3,000 feet and get the larger view here. The president has long said that tariffs on imported steel and aluminum were going to help U.S. industries. Ultimately, is that what has happened here?
HORSLEY: Not really. You know, steelmakers did get an initial boost last year when the tariffs first went into effect, and the price of steel went up. Of course, that was hard on companies that use a lot of steel. And there's more of those than there are steelmakers. Since then, though, the price of steel has actually slumped again, partly as a result of falling demand. In the third quarter, U.S. Steel, for example, actually lost money. And it's announced layoffs of some workers. So the tariffs have created a lot of uncertainty, created a lot of angst, but they haven't necessarily been a lasting boost for domestic metalmakers.
KING: OK. And now some more uncertainty this morning for Brazil and Argentina. NPR's Scott Horsley. Scott, thanks so much for your time.
HORSLEY: You're welcome.
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