Earlier this week, President Trump announced he will impose tariffs on steel and Aluminum from Brazil and Argentina, the two largest economies in Latin America, due to a "massive devaluation to their currencies". President Trump is accusing Brazil and Argentina of manipulating their currencies, and thus lowering the prices of their goods and hurting American farmers.
The Brazilian Real is trading 8% lower against the USD YTD and the Peso is down almost 40% YTD. But both countries are struggling from a macro-economic perspective, with the unemployment rate in Brazil above 10% and the Real reaching record low last week, the central bank of Brazil had to cut interest rates three times in the past four months to jumpstart the economy, which grew at a rate of 0.2% over the past year. In Argentina, inflation is above 50% and about a third of the population lives in poverty. The Argentine central bank has raised its interest rate to 63% to stop the decline of the currency.
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