Why the highly protectionist “Section 232” caused some sectors to watch the skyrocketing of ticket prices

Some sectors, at least for now, are merely observing the tariff hike imposed by Donald Trump on Brazil. This is because they are already feeling the effects of US actions in another way: via Section 232.

Created in 1962, the United States Trade Expansion Act provides for this division as a mechanism to flag products as potential threats to national security. This legislation authorizes the American president to impose restrictions on imports, such as tariffs or quotas.

Currently, semiconductors, critical minerals, and pharmaceuticals are the products under investigation under Section 232. The allegation in this case is that reliance on imports of these products could pose a risk to U.S. national security.

The pharmaceutical sector, in fact, could be taxed up to 200% “soon”.

Sectors in Brazil

Sectoral analyses indicate little weight on these areas in Brazil at this time:

Citibank analysts highlighted in a report on the 10th that the current steel tariffs already refer to Section 232, and weigh in at precisely 50%. Another analysis, this one from the bank BTG Pactual, on Wednesday (10), explains that the new tariff will not be cumulative to the 25% already applied to automobiles and auto parts, nor to the 50% on steel and aluminum.

Regarding pharmaceutical products, Brazil does not export any medicines to the United States. On the other hand, if Brazil uses the Economic Reciprocity Act to tax medicines, as it does in other sectors, it could backfire , with local inflation on these items.

Furthermore, the Research Pharmaceutical Industry Association (Interfarma) has already spoken out against the waiving of drug patents, another possible measure. The claim is that this could negatively affect research, the development of new treatments, and investment in the sector.

Criticism and Protectionism in Section 232

The biggest criticism of the section is that it has been used to justify protectionist measures. One example was the increase in tariffs on steel and aluminum in 2018 and 2020, under the argument of protecting American industry and national defense.

The US government claimed that international trade could limit the supply of raw materials essential for the production of nuclear energy, military equipment or the Armed Forces.

Despite the controversy surrounding World Trade Organization (WTO) rules, the organization's own General Agreement on Tariffs and Trade (GATT) allows restrictions for national security reasons. However, under strict criteria and international oversight.