Brazilian steelmaker Gerdau is considering expanding its output capacity in the United States rather than constructing a new plant in Mexico, due to trade tariffs imposed by President Donald Trump. Initially planning to invest $500 million to $600 million in a new plant in Mexico with a capacity of 600,000 metric tons annually, the final decision has been postponed until July.
CEO Gustavo Werneck stated, "Special steel is a very important segment for us in the Americas." He mentioned the possibility of either a phased approach for the Mexican plant or increasing production capacity in the U.S., leveraging existing facilities in Michigan and Arkansas.
President Trump's recent tariff increases on steel and aluminum imports to 25% without exceptions have influenced Gerdau's plans. Werneck believes these tariffs will enhance production mix and profitability in the U.S.
Operating at 70% capacity in the U.S., Gerdau posted a 9% decline in fourth-quarter net profit. Despite challenges, analysts foresee Gerdau North America benefiting from Trump's tariffs, while the Brazilian unit may face challenges.
Gerdau's Sao Paulo-traded shares rose 0.7% in line with the broader Bovespa stock index on Thursday.