Gerdau Considers Boosting U.S. Capacity Amid Trump Tariffs
Brazilian steel giant Gerdau is weighing options to augment its U.S. production capabilities instead of pursuing a new plant in Mexico. CEO Gustavo Werneck disclosed this shift in strategy, attributing it to the impact of tariffs imposed by President Donald Trump.
Previously, Gerdau contemplated establishing a new specialty steel mill in Mexico with an annual capacity of 600,000 metric tons. However, the company has deferred its investment decision until July, citing the evolving geopolitical landscape.
"Special steel remains a crucial segment for us in the Americas," Werneck stated. "We're exploring the possibility of a two-stage approach for the mill or enhancing our capacity in the United States."
Trump's recent tariff hike on steel imports (25%) and threats against trading partners (e.g., Mexico, Canada) present unique opportunities for Gerdau's U.S. operations. The company's significant footprint in the U.S. was previously touted as a buffer against protectionist measures.
Werneck anticipates the tariffs will optimize production mix and enhance profitability in the U.S. Gerdau currently operates at 70% of its U.S. rolling capacity, equivalent to approximately 4 million tons annually.
Despite a 9% drop in adjusted net profit for the fourth quarter, Gerdau remains optimistic about its North American segment. Analysts at Scotiabank foresee positive near-term results due to Trump's tariffs, while acknowledging potential challenges for the Brazilian unit.
Shares of Gerdau on the Sao Paulo exchange witnessed a 0.7% rise on Thursday, mirroring the broader Bovespa index.