Proposed U.S. tariffs could cut Brazil's GDP by as much as 0.8%
The final impact will depend on how Luiz Inacio Lula da Silva's administration responds and whether Brazil can redirect its exports.
Brazil's annual export loss could range from $12 billion to $17 billion, representing 3.6% to 5% of the country's total exports, according to Rogério Marin, CEO of Tek Trade and president of the Foreign Trade Companies Union of Santa Catarina, in comments to the Brazilian digital outlet Agricultura y Negocios.
Marin estimates an annual negative impact on GDP of between 0.6% and 0.8%.
According to XP, one of Brazil's major investment and financial services firms, the tariffs could reduce GDP growth by 0.3 percentage points in 2025 and 0.5 percentage points in 2026, with Brazilian exports to the United States projected to fall by $6.5 billion in 2025 and $16.5 billion the following year.
Agribusiness firm FGVAgro said in a statement that the proposed 50% tariff would particularly impact the agricultural sector, which accounts for 30% of exports to the U.S. market.
"Food exports are estimated to fall by as much as 75%, which could cause a contraction of up to 0.41% in Brazil's GDP. Domestic consumption is also projected to decline by as much as $13 billion," the firm said.
Brazil's National Confederation of Industry, or CNI), and other business groups have urged a diplomatic resolution. "A rupture in the relationship with the United States would cause serious harm to our economy," said Ricardo Alban, president of the CNI, who called for "intensifying negotiations to reverse this decision."
The American Chamber of Commerce for Brazil, Amcham Brasil, has urged avoiding a trade war, saying it "has no winners." The group argues that the arbitrary imposition of tariffs serves neither side's interests and instead creates uncertainty that discourages investment and economic growth.
Brazil maintains a strong trade relationship with the United States, exporting about $41 billion annually, primarily in industrial and agricultural goods. That volume represents roughly 1.7% of Brazil's GDP.
"Brazilian industry -- especially manufacturing -- has broken export records to the United States in recent years, underscoring the importance of maintaining a stable trade environment," said Marcos Santos Carena, director of the Business Observer, a consulting firm that operates in Brazil, Colombia and the United States.
The announced tariffs could significantly impact several sectors of Brazil's economy. Experts warn that about 40% of the affected exports are manufactured goods with limited potential to be redirected to other markets.
The agricultural and agribusiness sectors could be among the hardest hit, as the United States is a key market for products such as coffee and orange juice. One-third of the coffee and half of the orange juice consumed in the United States comes from Brazil, Santos Carena said. Other agricultural exports could also be affected.
In the aerospace sector, Embraer -- the Brazilian aircraft manufacturer -- has been identified as one of the companies that could be hit hardest, with sharp declines in its market value. The tariffs could hurt the competitiveness of its exports to the United States.
Brazil's steel and aluminum industries are already subject to additional tariffs, and a new 50% levy would make these exports unviable, according to industry representatives.
Although the United States accounts for a small share of Brazil's mining exports -- about 4% -- the tariffs could affect sales of gold, natural stones, ornamental rocks, iron ore, kaolin and niobium.
Other exports that could be affected include engines and generators, parts for industrial machinery, data processing equipment, measuring instruments, wood and forest products -- such as pulp and fiberboard -- and meat.
In a meeting lasting more than four hours at the Palácio da Alvorada on Sunday, Lula convened his cabinet ministers -- including those from finance, industry, agriculture, and foreign affairs -- along with the Central Bank president and Senate leaders to coordinate a response to the tariffs announced by President Donald Trump.
Among the agreed measures was the creation of a committee led by Vice President Geraldo Alckmin. The group, which includes business leaders, will bring together affected sectors to develop joint proposals and advise the president before any official announcement.
The government pledged to issue a decree by Tuesday outlining legal and technical criteria for triggering countermeasures if the U.S. tariffs take effect Aug. 1, as Trump promised.
While officials have not ruled out reciprocal action, Lula's administration said its priority is negotiation, multilateral diplomacy -- through channels such as the World Trade Organization -- and non-tariff solutions.
Copyright 2025 UPI News Corporation. All Rights Reserved.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
18 minutes ago
- Yahoo
Obama hits back at Trump ‘treason' accusation over Russia investigation
Former President Barack Obama hit back Tuesday at President Donald Trump's accusation that his predecessor committed 'treason' related to the investigation into Russian interference in the 2016 presidential election. Hours after Trump falsely accused Obama of trying to rig the 2016 election, the ex-president's office said it had no choice but to publicly refute the claim. 'These bizarre allegations are ridiculous and a weak attempt at distraction,' Obama's office said in a statement. The 44th commander in chief's office debunked the claim that an intelligence report released last week by Trump Director of National Intelligence Tulsi Gabbard somehow amounts to new evidence against Obama or losing 2016 Democratic candidate Hillary Clinton. ADVERTISEMENT The statement noted that neither Obama nor Clinton ever claimed that Russia succeeded in flipping votes from the Democrat to Trump's column in the election that catapulted him to the White House. It pointed to a 2020 bipartisan report by the bipartisan Senate Intelligence Committee, led by then-chairman ex-Sen. Marco Rubio, that instead accused Russia of seeking to influence the election in Trump's favor. 'Nothing in the document issued last week undercuts the widely accepted conclusion that Russia worked to influence the 2016 presidential election but did not successfully manipulate any votes,' Obama's office said. The statement came soon after Trump erupted in a rant against Obama during an Oval Office meeting with Philippines President Ferdinand Marcos. 'They caught President Obama absolutely cold,' Trump said. 'They tried to rig the election and they got caught.' ADVERTISEMENT 'It's time to go after people,' he added. 'Obama's been caught directly…He's guilty. This was treason.' Trump's outburst is seen by critics as an attempt to distract from negative attention regarding his relationship with late sex trafficker Jeffrey Epstein and unanswered calls to release files related to the notorious pedophile's case. Trump's right-wing MAGA base has been pushing for the administration to publicly bare Department of Justice files on the case even after Attorney General Pam Bondi said she wouldn't release any more information related to the sex-trafficking case. Gabbard's report, released Friday, appears to be the latest effort to change the subject from Epstein. It downplayed the extent of Russian interference in the 2016 election by highlighting Obama administration emails showing officials had concluded before and after the presidential race that Moscow had not hacked state election systems to manipulate votes in Trump's favor. ADVERTISEMENT But Obama's Democratic administration never suggested otherwise, even as it exposed other means by which Russia interfered in the election, including through a massive hack-and-leak operation of Democratic emails by intelligence operatives working with WikiLeaks. _____
New York Post
20 minutes ago
- New York Post
US Olympic and Paralympic Committee bans transgender athletes in compliance with Trump order
The U.S. Olympic and Paralympic Committee is falling in line with an executive order from President Donald Trump banning transgender women from women's sports. The committee quietly updated its eligibility rules Monday, adding a paragraph to its 27-page 'Athlete Safety Policy' posted to its website that includes language that implies it bars transgender women from competing in women's divisions. Trump signed the 'Keeping Men out of Women's Sports' executive order — also known as Executive Order 14201 — in February. Advertisement The LA2028 official Olympic flag at Los Angeles City Hall on September 23, 2024. Getty Images 'The USOPC will continue to collaborate with various stakeholders with oversight responsibilities, e.g., IOC, IPC, NGBs, to ensure that women have a fair and safe competition environment consistent with Executive Order 14201 and the Ted Stevens Olympic & Amateur Sports Act,' the added language in the document stated. It's not clearly stated how the policy will be enforced, and it is unclear whether any American Olympians will be banned from the upcoming 2028 Summer Olympics taking place in Los Angeles. Advertisement A USOPC spokesperson told the New York Times that the committee had been having 'a series of respectful and constructive conversations with federal officials' following the president's executive order. The committee said it would work with national governing bodies to implement the new policy. 'As a federally chartered organization, we have an obligation to comply with federal expectations,' the USOPC statement read. President Donald Trump reacts after the FIFA Club World Cup 2025 Final match between Chelsea FC and Paris Saint-Germain. FIFA via Getty Images Advertisement No openly transgender woman has won an Olympic medal. The U.S. Olympic and Paralympic Committee's former policy based its rulings on 'real data and science-based evidence rather than ideology,' and that it would be 'making science-based decisions, sport by sport and discipline by discipline, within both the Olympic and Paralympic movements.' The International Olympic Committee has struggled to address the issue of transgender athletes in sports. USA Fencing updated its policy last week in response to criticism that it had been facing for allowing biological males to compete in the women's category. Part of the requirements to compete in a domestic women's competition include the language, 'Athletes who are of the female sex, provided all other entry criteria have been met.'
CNN
20 minutes ago
- CNN
Analysis: Both targets of Trump's tariffs, the EU and China still can't get along
As the two biggest economic targets in Donald Trump's trade war, some analysts thought the European Union and China could move closer together and stake out common ground. But a summit between the two sides in Beijing on Thursday is instead expected to showcase the deep-seated frictions and mistrust that are widening a rift between the two heavyweights. European Council President Antonio Costa and European Commission President Ursula von der Leyen are set to meet Chinese leader Xi Jinping and hold summit talks with Chinese Premier Li Qiang in Beijing. The meeting comes as both countries have faced heightened tariffs on their exports to the US – with uncertainties in US trade relations driving Beijing to look to tighten ties with the EU and other major economies. But a list of grievances between the two sides are setting that goal out of reach. The EU was far from shy about its concerns in the lead up to the summit. Officials in recent weeks have reiterated their long-standing concerns over what they say are inexpensive Chinese goods 'flooding' European markets, raised alarms about Beijing's move to squeeze the rare earths supply chain, and decried its ongoing backing for Russia as it wages war in Ukraine. Beijing has lashed out against those concerns, including the 27-member bloc's move last year to raise tariffs on its electric vehicles, launching a range of its own trade probes in apparent retaliation. After the EU last month announced it was barring Chinese companies from participating in public tenders for medical devices over a certain value, Beijing hit back with its own curbs on government purchases of Europe-made devices. On Monday, China's Ministry of Commerce slammed the EU decision to include two Chinese banks and a handful of other firms in its latest sanctions against Russia over its invasion of Ukraine. It claimed the move would have a 'severely negative impact on China-EU economic and trade relations.' All this sets the stage for a contentious summit, ostensibly meant to celebrate 50 years of relations, that's already been whittled from a planned two days to a single-day event. 'We should expect a very difficult moment and not a deal making moment,' said Abigaël Vasselier, head of the Foreign Relations team at MERICS think tank in Germany, during a media briefing this week. And in some ways that mirrors frictions between the China and the US, she added: 'China has created leverage over Europe, has gone into a tit-for-tat escalation with Europe, and has linked all issues. You could almost say this looks like a Trump playbook used by China on Europe.' Trump's trade war – and his negotiations with both major economies – is also casting a long shadow over the summit. There were signs earlier this year that Beijing hoped shared adversity in the face of tariff threats from the US could push China and Europe together. And earlier this month, Beijing granted a reprieve for Europe's major cognac makers following an anti-dumping probe widely seen as retaliation for the bloc's imposition of up to 45% tariffs on its electric vehicles last year. But in separate addresses to G7 leaders and European lawmakers in recent weeks, von der Leyen made clear the bloc's deep concerns about Beijing had been unresolved. 'China is using this quasi-monopoly (on rare earths) not only as a bargaining chip, but also weaponizing it to undermine competitors in key industries,' she said to G7 leaders meeting in Canada in June. Beijing has extensive control over supply chains for these critical minerals key in everything from EV batteries and cell phones to fighter jets and roiled global manufacturing after placing export controls on some such minerals amid its trade spat with the US. China agreed during a truce with the US in June to ease these controls. Von der Leyen also called for unified G7 action to pressure Beijing as it 'floods global markets with subsidized overcapacity that its own market cannot absorb.' While von der Leyen has long been hawkish on Beijing, voices in China have seen her as pandering to the US to ease trade frictions – and are watching closely for signs that a potential US-EU trade deal could target their economy. But China's leaders are also joining this week's summit in what they see as a relatively strong position relative to the EU when it comes the US talks. Beijing sees its decision to play hardball with the US, by raising tit-for-tat levies and then showing the power of its rare earths leverage, as paying off – bringing the US to the negotiating table twice and resulting with an agreement for a trade framework. Even as frictions remain - including China's purchases of Russian oil and Washington's elevated tariffs on Chinese goods - Beijing has already chalked wins, like the announced resumption of sales of Nvidia's H20 AI chips to China, in a reversal of an April US export ban. The EU, meanwhile, is scrambling ahead of an August 1 deadline to cut a deal with the US to avert heavy tariffs – and may see more at stake than their Chinese counterparts. 'The worst-case scenario would be for Europe to find itself in a two-front trade war with the US and China at a time when Trump is pressing for some sort of Faustian bargain with Beijing,' said Noah Barkin, a Berlin-based visiting senior fellow at the German Marshall Fund of the United States think tank. With this backdrop, chances for any concrete outcomes appear low to observers on both sides, who instead stress that dialogue can be a form of progress in itself. Europe has been clear that it doesn't want to cut ties with China, but rather 'rebalance' its economic relationship, which saw a more than 300 billion Euro deficit last year. It also aims to 'derisk' its supply chains, and work together with China on shared global issues like climate change – a potential area of agreement this week. But experts say a key hold-up for Europe has been a sense that Beijing is unmoved by Brussels' core concerns. 'We haven't had an EU-China summit that produced real deliverables for many years and this one won't be any different. That is a reflection of Beijing's refusal to address the EU's two biggest concerns: an increasingly imbalanced economic relationship that poses a growing threat to European industry and China's ongoing support for Russia,' said Barkin. China has rejected Europe's concerns about industrial overcapacity leading to a flood of exports as baseless, with one state media outlet recently saying that instead of 'rebalancing trade,' Europe to 'needs to recalibrate its mentality.' Instead, Beijing is expected to continue to push for setting minimum prices of Chinese-made EVs in Europe instead of tariffs, as well as unfettered access to European technology and markets. And even as Russia ramps up its assault on Kyiv, Beijing is unlikely to give any sign of a shift in that position on Moscow, its close partner. Chinese Foreign Minister Wang Yi reportedly told the European Union's top diplomat earlier this month that Beijing can't accept Russia losing its war against Ukraine as this could allow the United States to turn its full attention to China. China has long claimed neutrality in the war and defended its 'normal trade' with Russia, while ramping up purchases of its oil and shipping goods Western leaders say power Russia's defense industry. But observers in China still feel there's room for collaboration as the two sides sit down on Thursday. 'To solve challenges from climate change to AI and global conflicts, the European Union needs China, and China needs the European Union,' according to Wang Yiwei, director of the Institute of International Affairs at Renmin University in Beijing. Alluding to the view that the EU can be a counterweight for China against US frictions and a partner in promoting globalization, he added: 'If China and the European Union seek win-win cooperation, the so-called new Cold War cannot prevail.'
