On the first anniversary of the original Liberation Day, April 2, 2026, President Donald Trump signed a new presidential proclamation expanding the powers of Section 232 of the Trade Expansion Act of 1962. The measure took effect on April 6 and brings three changes that directly affect Brazil: the extension of steel and aluminum tariffs to copper, the inclusion of pharmaceuticals under the Section 232 regime, and — the most technically significant change with the greatest financial impact — a shift in the tariff calculation base from the metal content embedded in a product to the total customs value of the imported article.
That last change, superficially bureaucratic, has a multiplier effect on effective tariff costs. And it arrives at a moment when Section 122, Trump's other tariff instrument, faces judicial challenge with a ruling pending at the Court of International Trade.
What Changed in the April 2 Proclamation
Section 232 existed before 2026. Trump had already used it for steel and aluminum since 2018, with tariff rates of 25% and 10% respectively. What the April 2 proclamation changed was the scope and the calculation mechanics.
Calculation base: Previously, so-called "derivative articles" — manufactured products containing steel, aluminum, or copper — had tariffs calculated only on the portion of the customs value corresponding to the metal present in the product. An electric motor, for example, paid tariffs only on the value of the copper embedded in it, not on the complete motor. As of April 6, the tariff applies to the total customs value of the imported product. For high-value-added products with relatively little metal content, this is a substantial cost increase.
Copper enters the regime: Copper had been treated separately and with less urgency. The April 2 proclamation formally places it on equal footing with steel and aluminum under Section 232, with a maximum tariff rate of 50%.
Pharmaceuticals at up to 100%: Patented drugs without a government agreement now face a maximum tariff of 100%. I covered this in detail in the article on the 100% drug tariff, but context here is useful: the inclusion of pharmaceuticals under Section 232 is strategic. Section 232's legal basis (national security) has survived judicial scrutiny better than IEEPA, which the Supreme Court struck down in February 2026.
15% de minimis: The proclamation introduced a 15% de minimis exemption for derivative articles with metal content below that percentage of the total product value. In practice, this protects categories with very little relative metal content, but most traditional manufactured products fall outside the exemption.
The Tariff Map After April 6
| Material | Maximum rate | Calculation base (post-Apr 6) |
|---|---|---|
| Steel | 50% | Total customs value of article |
| Aluminum | 50% | Total customs value of article |
| Copper | 50% | Total customs value of article |
| Pharmaceuticals (no agreement) | 100% | Total customs value |
| Pharmaceuticals (with MFN agreement) | 0% through Jan/2029 | — |
| Articles with less than 15% metal content | Exempt | — |
The 50% rate for metals is not universal — it represents the ceiling. Actual rates depend on country of origin, product type, and any bilateral agreements. But the post-April 6 regime raises the cost floor broadly.
The Legal Front: Section 122 and the Challenges at the Court of International Trade
While Section 232 advances, the other leg of Trump's tariff system — Section 122, which imposes a 10% global tariff — faces direct legal challenge.
On April 10, 2026, the U.S. Court of International Trade held a hearing on challenges to Section 122. The central question is whether a chronic trade deficit — structural to the dollar's role as the global reserve currency — constitutes the "serious balance-of-payments imbalance" that the 1974 law was designed to remedy. Section 122 carries a 150-day clock from its implementation on February 24, placing expiration on July 24, 2026.
If the court suspends Section 122 before that date, or if it simply expires without renewal, the American tariff regime is reduced to Section 232 (for metals and pharmaceuticals) and the Section 301 investigations the administration has been preparing for specific countries. That is the base-case scenario for the second half of 2026.
The Impact on Brazil: Gerdau, CSN, and Vale on the Front Lines
Brazil is one of the largest exporters of steel and aluminum to the United States. That position, once a source of significant revenue, now faces a more restrictive environment.
Brazilian steel: Brazil ranks among the top five steel suppliers to the American market. The primary exposed companies are Gerdau and CSN. Gerdau, in particular, has industrial operations in the U.S. itself (through Gerdau Ameristeel), which serves as a partial hedge against import tariffs — domestically produced steel pays no tariff. But volumes exported directly from Brazil bear the full impact of the 25% base rate plus any additional charges.
Aluminum: Brazil produces primary aluminum in relevant quantities. With the calculation base shifting to total product value for derivative articles, exporters of manufactured products containing aluminum — not just the pure metal — now face higher tariff costs in the U.S.
Vale and iron ore: Here the logic is indirect. Iron ore is not directly targeted by Section 232 tariffs, which focus on steel and aluminum. But if tariffs reduce American steel production (by raising input costs or dampening demand), the supply chain contracts, and demand for iron ore from suppliers like Vale could be marginally affected. The more relevant impact for Vale continues to be Chinese demand, which I address below.
| Company | Direct exposure | Mechanism |
|---|---|---|
| Gerdau | Medium (partial hedge via U.S. operations) | Steel exports from Brazil to U.S. market |
| CSN | High | Significant volume of steel exported to the U.S. |
| Vale | Indirect | Cascading effect on global steel demand |
China, Brazil, and the Redirection of $171 Billion
The picture is not limited to the negative impact of American tariffs. A positive side for Brazil emerges from the same movement.
Bilateral Brazil-China trade reached $171 billion in 2025, a historical record. Part of that growth is a direct result of the supply chain redirection that American tariffs triggered: China reduced purchases of steel and commodities from American sources and expanded contracts with Brazilian suppliers. Iron ore and soybeans were the primary items in that shift.
The logic here is substitution, not contraction. When the U.S. imposes surcharges on specific products, flows redirect, and countries with lower tariffs or more favorable bilateral relations gain market share. Brazil, with China as its largest trading partner and supply capacity in steel, aluminum, soybeans, and iron ore, is well positioned to capture part of that diversion.
This doesn't eliminate the impact of American tariffs on Brazilian exporters that depend on the U.S. market. But it creates a balance that Brazil's total export data — $348.3 billion in 2025, a historical record — has already begun to reflect.
Global Supply Chains Under Pressure
The Section 232 base change — from metal content to total product value — has an amplified effect on complex industrial supply chains. A high-value-added manufactured product containing structural steel now carries a tariff calculated on its final price, not on the cost of the metallic input.
This creates two effects for American importers:
First: Products with high value-to-metal ratios — industrial machinery, equipment, vehicles — become significantly more expensive to import than before. The effective tariff, as a percentage of the finished product's cost, rises. This pressures American importers to seek domestic suppliers or to pass the cost on.
Second: The 15% de minimis exemption creates an incentive for manufacturers to reformulate their products to stay below the metal content threshold, or to relocate production stages that use more metal outside the U.S. This is reverse de-industrialization — production doesn't return to the U.S., but parts of it migrate to countries with lower tariff exposure.
For countries like Brazil, with growing industrial capacity, this could open opportunities in specific manufacturing niches that become more expensive to produce in the U.S. or to import from destinations with higher tariff rates.
The Legal Context: Why Section 232 Survives While IEEPA Fell
When the Supreme Court struck down the IEEPA tariffs from Liberation Day in February 2026 — by a 6-3 vote in Learning Resources, Inc. v. Trump — the Trump administration needed a more solid legal foundation. Section 232, with its national security anchor, provides that stability.
The judicial precedent for Section 232 is different. American courts have historically accepted the national security argument as a legitimate basis for trade restrictions, including the Court of International Trade, which in prior cases recognized broad presidential discretion in this area. The Supreme Court has not yet specifically ruled on Section 232 in the post-Liberation Day context.
This has an important practical consequence for investors: tariffs on steel, aluminum, copper, and pharmaceuticals imposed via Section 232 carry greater judicial durability than the IEEPA tariffs struck down in February. They are not transitory in the same way. For companies that need to plan supply chains, that changes the calculation.
What This Means for the Portfolio
Four dynamics emerge from this context for investors:
Brazilian steelmakers with U.S. exposure: CSN and Gerdau are in the direct line of impact. Tariff pressure on U.S. exports is not new — it dates to 2018 — but raising the ceiling to 50% and shifting the calculation base for derivative articles to total value increases the effective cost. Gerdau has partial hedging via U.S. operations; CSN has less. For those holding positions in these stocks, monitoring export volumes to the U.S. and the capacity to redirect to other markets is essential.
Vale and the iron ore chain: The impact is indirect but real. If global steel production contracts due to tariffs, iron ore demand falls at the margin. The most relevant scenario for Vale continues to be China — and bilateral Brazil-China trade at $171 billion suggests Chinese demand for Brazilian inputs is growing, not falling.
Companies with copper exposure: Copper entering Section 232 formally is a new development with implications for miners and electrical equipment manufacturers. In Brazil, copper exposure exists in diversified companies and via commodity ETFs. Global electrification — electric vehicles, solar power, transmission grids — will continue demanding copper in growing volumes, and Brazilian and Latin American suppliers may benefit from demand diversion from more expensive American-sourced copper.
Volatility as a trading window: The period between the April 2 proclamation and the Court of International Trade decision on Section 122, expected before July 24, creates concentrated commercial uncertainty. Each judicial development, each bilateral agreement announcement, each trade balance data point can move steelmaking, commodity, and pharmaceutical stocks in either direction. For traders, this is the type of environment that generates actionable moves — provided risk management is properly calibrated.
At Royal Binary, our trading team monitors events like this Section 232 expansion as part of daily operations. If you want to understand how professionals navigate geopolitical volatility with discipline, explore the platform.