The new geopolitics of steel and Brazil’s trade defense policy
Public Interest, WTO Tariff Policy Space and Long-Term Industrial Strategy
Introduction: steel is no longer merely a trade issue
The steel industry today occupies a position that extends beyond the traditional logic of supply, demand and price. In an international environment marked by excess capacity, aggressive industrial policies, subsidies, state financing, trade barriers and increasing market fragmentation, steel has become a strategic asset associated with infrastructure, defense, energy, technological transition and a country’s ability to preserve its productive autonomy.
In this context, foreign trade policy cannot be conducted solely through isolated decisions intended to respond to short-term price pressures or the immediate needs of particular consuming sectors. A long-term strategy is needed, capable of combining trade openness, competitiveness, defense against unfair practices and the preservation of Brazil’s industrial capacity.
The central question, therefore, is not whether to protect or open the market. It is how Brazil can maintain a competitive, technologically advanced steel industry integrated into domestic production chains, while ensuring efficient access to inputs and preserving the benefits of international competition.
The new international reality: excess capacity and trade diversion
The global steel market is undergoing a phase of structural imbalance. The European Union estimates that global excess capacity already exceeds 620 million metric tons and could reach approximately 721 million metric tons, more than five times the European Union’s annual steel consumption. The European Commission itself identifies non-market policies and practices as one of the factors associated with the expansion of this excess capacity.
This situation increases the risk of trade diversion. When major markets adopt mechanisms to restrain imports, volumes that can no longer find a place in those destinations seek alternative markets. Countries with lower levels of protection naturally become candidates to absorb these surpluses.
The consequence is particularly relevant for economies with sizable consumer markets, such as Brazil. An excessively passive trade policy can turn the country into a preferred destination for international surpluses, putting pressure on prices, reducing margins, discouraging investment and undermining the sustainability of strategic industrial sectors.
China and the asymmetry of competitive conditions
The scale of Chinese production capacity and the role of the state in formulating and implementing industrial policies must be considered when assessing international competitive conditions. The issue is not Chinese origin in itself, but the possibility that structures of state support, financing, incentives, excess capacity and industrial policies significantly alter the conditions under which prices are formed and international competition takes place.
For Brazil, this means that the analysis of import prices should not be separated from the conditions under which those prices are formed. In certain sectors, observed international prices may not adequately represent a benchmark for competition on equivalent terms.
Trade defense, in this sense, should not be interpreted as an instrument for closing markets. It is a mechanism designed to restore competitive conditions when unfair practices or significant distortions have harmful effects on domestic industry.
Public interest must be assessed over the long term
One of the most important issues in formulating Brazilian trade policy is correctly defining the concept of public interest, a sine qua non condition for the legitimate use of the Public Interest instrument.
Public interest cannot be reduced to the immediate benefit arising from a potential reduction in the price of a particular input for one part of industry. The analysis must also consider effects on investment, employment, tax revenue, innovation, production capacity, supply security, technological development, infrastructure and the competitiveness of chains that depend on domestic products.
In the case of steel, this perspective is even more important because the chain cuts across sectors. Steel supplies construction, machinery and equipment, energy, oil and gas, transportation, automotive, infrastructure, defense and various capital goods segments.
A policy that reduces the cost of an input in the short term but causes a permanent loss of production capacity in the medium and long term may produce exactly the opposite of its intended effect. Growing dependence on imports can increase the economy’s vulnerability and reduce its ability to respond to international crises.
Trade defense, DECOM and legal certainty
Brazil has a specialized institutional structure to investigate dumping, subsidies and other situations covered by trade defense instruments. The Department of Trade Defense — DECOM, within the Secretariat of Foreign Trade, conducts technical proceedings subject to rules, procedures, participation by interested parties and analysis of the evidence submitted.
The existence of public interest mechanisms is legitimate and necessary. However, their use should complement, rather than undermine, the technical logic of trade defense.
Camex’s current governance reinforces this need. The Committee on Trade Defense and Public Interest (CDC) has a preparatory rather than a decision-making role, examining and discussing trade defense matters and public interest assessments before they are considered by Gecex. Current regulations expressly provide for the analysis of proposals to suspend or modify duties on public interest grounds.
This institutional design can contribute to more comprehensive decisions, provided that the concept of public interest is applied using objective criteria, with stated reasons, transparency, economic justification and a long-term perspective.
The world is protecting itself — and Brazil needs to interpret this trend
Recent developments in foreign trade policies show that major economies are treating steel as a strategic sector.
On July 1, 2026, the European Union put into effect a new mechanism to protect its steel industry from the effects of global overcapacity. The system establishes duty-free tariff-rate quotas totaling 18.3 million metric tons per year and a 50% tariff on imports exceeding those quotas.
Also beginning on July 1, 2026, the United Kingdom adopted a measure limiting the volumes of steel that may enter duty-free; volumes exceeding the quotas are subject to a 50% tariff. The British government expressly links the measure to the need to preserve domestic production, critical infrastructure, defense and national security.
Brazil should not automatically copy these measures. They should, however, be studied as evidence of a structural change in international trade policy: developed countries are willing to use tariff and quantitative instruments to preserve industrial capacity considered strategic.
The WTO and tariff policy space: a strategic asset that must be mapped
Brazil has bound tariff commitments at the WTO. A bound tariff represents an international commitment and establishes, for each tariff line, the limit within which the country has undertaken a particular obligation. This differs from the tariff actually applied, which may be lower than the bound rate.
The WTO’s own tariff database shows that Brazil has 100% binding coverage and a simple average of bound tariffs of approximately 31.3%, while the simple average of applied MFN tariffs is around 12.0% in the most recent data available. These figures are national averages and do not mean that all tariff lines have the same bound rate.
This is precisely why Brazil should conduct a systematic mapping exercise by NCM/HS code, comparing:
- applied tariffs;
- WTO bound tariffs;
- Mercosur’s Common External Tariff;
- existing exceptions and tariff mechanisms;
- tariff-rate quotas;
- trade defense instruments in force;
- the origin of imports;
- trends in volumes and prices;
- the degree of external dependence;
- domestic production capacity.
Where legally available and economically justified tariff policy space exists, it should be considered as a trade policy instrument. This does not mean that every applied tariff can simply be raised to its WTO bound rate, since each line must be examined in light of the applicable multilateral and regional commitments. It does mean that the existing space should not be ignored when formulating a national strategy.
The European experience shows that tariff policy space can also be part of an international strategy
The European discussion is particularly relevant because the European Union has been addressing both protection for its industry and its tariff concessions at the WTO.
The European Commission received authorization to initiate negotiations under Article XXVIII of GATT 1994 with a view to modifying tariff concessions applicable to certain steel products, including the possibility of tariffs of up to 50%, subject to tariff-rate quotas for certain volumes.
This initiative reveals an often underestimated dimension of trade policy: WTO tariff bindings are not merely historical records. They are part of each member’s negotiating assets and can acquire strategic relevance during periods of profound transformation in international trade.
Brazil should therefore assess its own bindings from a strategic perspective, identifying where tariff policy room exists and where potential changes would require negotiation or other international procedures.
Brazil needs a coordinated steel strategy
Brazil’s response should not depend on isolated decisions. An integrated strategy is needed, combining industrial policy, foreign trade, robust trade defense, tariffs, investment, innovation, infrastructure and sustainability.
Among other things, this strategy should address the following areas:
- Comprehensive mapping of bound and applied tariffs by NCM/HS code, especially for steel products and their critical links.
- Continuous monitoring of global production capacity, trade flows, international prices and industrial policy developments among the main producers.
- Integration of tariff and trade defense instruments, preventing different measures from being analyzed in isolation.
- Urgent improvement of trade defense mechanisms and of measures to prevent trade diversion, triangulation, circumvention, artificial changes of origin and under-invoicing — the Customs Valuation Code and Import Licensing Code — especially for products subject to trade defense instruments.
- Assessment of effects on investment and production capacity, rather than on current prices alone.
- Greater coordination among MDIC, Camex, SECEX, DECOM, SRF, COANA and productive sectors, based on verifiable economic data and analysis.
- Strategic use of WTO negotiations, including the suspension of bindings when necessary, to preserve or expand industrial and trade policy space compatible with global market realities within the framework of multilateral rules.
- Coordination with Mercosur, taking into account the Common External Tariff, exceptions and commitments undertaken in trade agreements.
- Identification of sectors and products considered critical to the country’s national, economic, energy, technological and infrastructure security.
This is about industrial policy suited to the twenty-first century, rather than protectionism
It is important to reject a false dichotomy between free trade and industrial protection.
An open economy needs instruments to respond to unfair practices and shocks caused by other countries’ industrial policies. Likewise, a competitive industry needs fair international competition to improve productivity, innovation and efficiency.
The purpose of a modern and robust trade defense policy is not to prevent imports, but to prevent artificial conditions of competition from destroying efficient and strategic production capacity.
The recent experience of the European Union and the United Kingdom shows that the discussion has moved beyond the traditional concept of sectoral protection. The debate now encompasses resilience, national and economic security, critical infrastructure, defense, energy transition and productive autonomy.
Given the size of its market, its great wealth, the availability of raw materials and the importance of its steel industry, Brazil has the conditions to build a long-term industrial policy for its national security.
Strategic recommendations that must be adopted for national security
Brazil should move toward a long-term national agenda for steel, structured around five pillars:
- Technically robust and timely trade defense;
- A coordinated tariff policy using all instruments available under the WTO and Mercosur;
- Protection of productive investment and domestic technological capacity;
- Continuous monitoring of global overcapacity and trade flows;
- An urgent definition of public interest based on the long-term national economic interest, thereby ensuring national security.
This agenda should be accompanied by a permanent indicator dashboard, enabling the government to identify early risks of trade diversion, abnormal import growth, price deterioration, loss of domestic production’s market share and a reduction in investment capacity that could seriously affect the country’s future.
The main gain would be replacing a predominantly reactive policy with a preventive, coordinated and predictable one.
Conclusion: preserving industrial capacity means preserving economic sovereignty
The world is changing rapidly. Trade policy is no longer merely a matter of tariffs; it has become part of countries’ national and economic security strategies.
Steel is one of the clearest examples of this transformation. The combination of global overcapacity, state industrial policies, trade barriers, quotas, tariffs and increasing competition for investment requires Brazil to reconsider how it uses its trade policy instruments.
The concept of public interest must incorporate a long-term horizon. The interests of consumers and industrial users matter, but they cannot be analyzed in isolation from the interest in preserving investment, jobs, technology, production capacity and supply security.
At the same time, Brazil should view the WTO not only as a set of limitations, but also as a space of rights and opportunities for agile renegotiation instruments. Mapping bound tariffs, together with an analysis of tariffs actually applied and Mercosur commitments, may reveal significant room for a more strategic, robust and swift trade policy.
The issue is not to close the Brazilian market. It is to ensure that trade openness takes place under balanced and fair conditions of competition, and that short-term decisions do not cause Brazil to lose industrial assets that took decades to build.
In a global economy increasingly shaped by strategic competition, preserving a strong, modern steel industry integrated into domestic supply chains is more than a sectoral policy. It is a decision about economic sovereignty.
Main sources and institutional references
World Trade Organization (WTO) – Brazil Member Profile / Tariff & Trade Data.
European Commission – Protecting EU steelmaking; EU steel measure and related regulatory framework.
EUR-Lex – Regulation (EU) 2026/1384 and documents concerning tariff concessions on steel products and Article XXVIII of GATT 1994.
UK Government – UK’s steel trade measure from 1 July 2026.
Ministry of Development, Industry, Trade and Services (MDIC/Camex) – Committee on Trade Defense and Public Interest; Gecex Resolution No. 906/2026 and Gecex Resolution No. 922/2026.
MDIC/SECEX/DECOM – trade defense information and databases.
Technical note: Any tariff change must be assessed individually by NCM/HS code, taking into account Brazil’s WTO bindings, Mercosur commitments, applicable trade agreements and relevant international procedures. The tariff references presented in this article are strategic in nature and do not replace the specific legal analysis of each tariff line.
