Tariffs could impact investment, exports, warns Brazilian industry

BRASILIA — US-imposed tariffs on Brazilian products could cause a drop in the country's exports for the first time in 21 months, while also negatively impacting investment and employment, the National Confederation of Industry, or CNI, warned in a report on Wednesday.

According to CNI's latest survey, export expectations for Brazil's industrial sector for the next six months fell 5.1 points to 46.6 points in August. When the indicator falls below 50 points, it indicates an expected contraction in exports.

"The worsening of export expectations is closely related to uncertainties in the external environment, mainly due to the new US trade policy," said Isabella Bianchi, CNI's policy and industry analyst.

A 50 percent tariff imposed by the US government on a number of Brazilian products took effect on Aug 6.

According to the CNI, the measure is already having an impact on industrial employment, which declined in July despite a rise in production growth.

The employment expectations index dropped to 49.3 points in August, signaling that employers do not anticipate job growth in the next six months.

Business owners are less inclined to invest. "The investment intention index fell to 54.6 points, the lowest level since October 2023. However, it remains 2.1 points above the historical average of 52.5 points," the report noted.

Talks with WTO

The United States has agreed to Brazil's request to enter talks with the World Trade Organization to discuss the tariffs imposed by Washington, according to a recent letter.

Brazil approached the global trade body in early August after President Donald Trump raised duties on more than a third of US-bound exports from the Latin American powerhouse, including key items like coffee, beef and sugar.

Trump hit Brazil with some of his highest tariff rates as punishment for what he calls a "witch hunt "against former far-right president Jair Bolsonaro, who is on trial for allegedly plotting to attempt a coup.

"The United States accepts the request of Brazil to enter into consultations," read a letter dated Aug 15 from the Washington WTO delegation and published on the organization's website.

"We stand ready to confer with officials from your mission on a mutually convenient date for consultations," it continued.

The US letter cautioned that some of the issues raised by Brazil "are issues of national security not susceptible to review or capable of resolution by WTO dispute settlement".

The WTO consultation process involves seeking a negotiated solution before moving into arbitration.

Trump's tariff order also charged that the Brazilian government's recent policies and actions threatened the US economy, national security and foreign policy.

Unlike most countries targeted by Washington's reciprocal tariffs, the US runs a trade surplus with Brazil, not a deficit.

Xinhua - Agencies