The imposition of 50% trade tariffs on all products exported by Brazil to the United States (US) will mean, in practice, a market closure between the two countries, with impacts on strategic industrial sectors, reflections on jobs, and also on food prices. This assessment comes from experts consulted by Agência Brasil.
In a letter to President Luiz Inácio Lula da Silva, on this Wednesday (9), US President Donald Trump announced that the sanctions will take effect starting August 1st.
“Of Brazil’s total exports, about 15% go to the United States. But it’s important to highlight that they are mainly manufactured and semi-manufactured products. If this continues, we will have unemployment in Brazil, a decrease in dollar inflows to the country, and this is very serious,” points out Professor Roberto Goulart Menezes, from the Institute of International Relations at the University of Brasília (UnB) and researcher at the National Institute of the United States (INEU).
Affected Products
In summary, crude oil, iron ore, steel, machinery, aircraft, and electronic products are among the most exported from Brazil to the US. Among these, there will be impacts on exports from Embraer and also Petrobras.
“Embraer has a reasonable market in the US with some of its jets, and Petrobras exports oil there. They can redirect those sales to other countries, but it involves making the most important market of all, the North American one, more expensive,” observes Alexandre Pires, professor of international relations and economics at Ibmec-SP.
In the agribusiness sector, sugar, coffee, orange juice, and meat represent the main items on Brazil’s export list to Americans. One short-term collateral effect is expected to be a drop in prices in the domestic market, especially for agricultural commodities that will no longer be exported.
“Every time there is some kind of closure, even self-embargo for phytosanitary reasons, for example, prices fall, as in the case of meat prices. And it’s likely that this will happen with meat, orange juice, and coffee,” highlights Alexandre Pires.
Pires projects pressure from the affected economic elites for a quick negotiation to reverse the tariffs, because the worst scenario is the prolonged maintenance of the sanctions.
“When we talk about tariffs, even if they are reduced, imagine six months, a year, or more in this situation. The problem will be resuming those markets afterward,” he points out.
Although Trump has accused Brazil of maintaining an unfair trade relationship, the fact is that the trade flow between the two countries totals about US$ 80 billion per year. Considering the trade balance (exports minus imports), the United States still maintains a surplus of US$ 200 million with Brazil.
Blackmail Tactics
Donald Trump’s announcement adds to other measures his government has adopted against various trade partners, including historic allies like Canada, Mexico, South Korea, and Japan. According to Roberto Goulart, professor at UnB, this is a blackmail method that is stronger now than in the previous term.
“What Donald Trump is doing is trying to block Brazil-US trade, blackmail. These tariffs are not reasonable. Now, we need to wait to see if there will be room for effective negotiation,” he points out.
For Alexandre Pires from Ibmec-SP, the 50% tariff on Brazilian products is, on average, 25% higher than those Trump applied to other countries, which is directly related to the political dimension of the episode.
“This tariff against Brazil has several components: STF effect, Brics effect, social media regulation effect. And, lastly, supposed commercial reasons of tariff reciprocity.”
Trump’s decision against Brazil comes in the same week that Trump and Lula exchanged criticisms over the Brics summit, a bloc that brings together the world’s largest emerging economies, held in Rio de Janeiro. Trump even threatened the group’s countries with trade tariffs, which now materializes in the Brazilian case.
“Trump confuses multipolarity and transformations in global geopolitical dynamics with anti-Americanism or anti-US sentiment. In the end, for him, confronting Brics is a way to confront China, the great commercial rival,” analyzes Roberto Goulart.
Source: Agência Brasil