Brazil, the second-largest steel exporter to the United States, said it has begun talks with the administration of US President Donald Trump in response to the steel tariff hikes set to take effect on March 12.

Trade relations between Brazil and Washington are tense as the US president plans to impose a 25% tariff on steel and aluminum imports from all of his trading partners, which would hit Brazil hard, which exported 4.08 million tons of steel to the United States in 2024.

In a phone call on Friday, Brazilian Foreign Minister Mauro Vieira and White House Trade Representative Jamison Greer agreed to form a “working group” to address tariff issues, the Brazilian Foreign Ministry said on its website.

The ministry added that the group could hold its first virtual meeting next week.

The talks come after a virtual meeting between Brazilian Vice President Geraldo Alckmin, US Secretary of Commerce Howard Lutnick, and White House Trade Representative Jamison Greer, in which Alckmin noted that the trade balance between the two countries is estimated at around $80 billion, with a surplus in favor of the United States of $200 million.

The two sides confirmed their intention to hold further meetings in the coming days, according to the Brazilian Ministry of Development, Industry and Trade.

For his part, Brazilian President Lula warned that his country would respond in kind if the increase in customs duties goes into effect, stressing that if the United States imposes taxes on Brazilian steel, Brazil will take counter-trade measures, including resorting to the World Trade Organization or imposing taxes on products imported from the United States.