MURRAY ADVOGADOS
However, experts warn that U.S. trade measures could slow global growth, strengthen the dollar, and add pressure on Brazil’s economy
03/05/2025
The tariffs imposed by Donald Trump on China, Canada, and Mexico—along with the retaliatory measures from these countries—could impact Brazil’s trade flows, but not immediately, economists say. Their main concern is the broader consequences of the tariff war, including high inflation paired with weak economic activity in the United States, elevated U.S. interest rates, and a stronger dollar globally. These factors come at a time when Brazil’s Central Bank is also working to control inflation domestically.
“The aggressive set of tariff increases in the U.S. could push the American economy toward potential stagflation,” said Sergio Vale, chief economist at MB Associados. This impact, he noted, is likely to be felt worldwide. If, in addition to Mr. Trump’s “tariff offensive,” other countries retaliate, U.S. GDP could decline by more than one percentage point, according to Mr. Vale. “Trump could still reverse his policy, but signs suggest he will double down on the same mistakes from his first term. The result will be slower global growth or even a recession,” he said.
For Brazil, he continued, the situation is even more challenging due to the negative impact of currency depreciation. Economic activity was already expected to slow this year due to high interest rates. “The U.S. measures only worsen this scenario, dragging us into a more adverse situation, with potential stagflation here as well,” Mr. Vale said.
Mr. Trump’s tariff dispute is escalating rapidly, noted Nicola Tingas, chief economist at the National Association of Credit, Financing, and Investment Institutions (ACREFI), pointing to responses from Canadian authorities as an example.
“In terms of trade flows to Brazil, the immediate impact is not significant, as it will depend on how the trade war evolves in the coming months and how each country adjusts. The real effects will be felt by economies directly involved in the dispute with Trump. Countries like Brazil, which maintain a certain balance in their relations with the U.S., could face consequences, but over a longer timeframe,” Mr. Tingas said.
However, Brazil is “fully exposed to U.S. interest rates and the strength of the dollar,” he noted. “The situation is complex, as market forces are pulling in different directions. The best approach for Brazil is to focus on strengthening its domestic economy to be better positioned in case of a more negative global outlook.”
The Brazilian government has responded with caution, awaiting a conversation between Vice President and Minister of Development, Industry, Trade, and Services Geraldo Alckmin and U.S. Commerce Secretary Howard Lutnick. The phone call was scheduled for Friday (28) but did not take place and remains unscheduled. However, Valor has learned that it is more likely to happen next week.
Brazilian exporters are also closely monitoring an executive order signed by the U.S. on Saturday to launch an investigation that could lead to higher tariffs on wood products, including lumber and derivatives such as furniture. The justification for the measure, as with the universal tariffs imposed on steel and aluminum, is national security, noted Livio Ribeiro, a partner at BRCG and a researcher at the Brazilian Institute of Economics (FGV Ibre). “The argument is that there is ample domestic supply and that imports are taking up market share.”
Although these items are not among Brazil’s top ten exports, the U.S., along with Europe, is one of the main markets for the country’s furniture and wood industry. Any new trade barriers could have substantial implications, said Welber Barral, former Brazilian foreign trade secretary and lawyer at BPP Advogados. “This could lead to additional tariffs or quotas,” he said. “Depending on the investigation’s outcome, tariffs could hinder the competitiveness of Brazilian products in the U.S. market.”
The investigation could take up to 270 days to conclude. “Given Trump’s increasingly aggressive stance, it is likely that tariffs will be raised,” Mr. Vale said, adding that “finding alternative buyers won’t be simple” with both the global and Brazilian economies slowing down.
(Lu Aiko and Fabio Murakawa in Brasília contributed reporting.)
*By Rafael Vazquez e Anaïs Fernandes — São Paulo
Source: Valor International
CSN, identified as a consolidator, could seek a partner, aiming to reduce debt
03/05/2025
The future of InterCement assets, part of the Mover group (formerly Camargo Corrêa), currently undergoing court-supervised reorganization since December, is poised to redefine the landscape of the cement sector, which is currently dominated by a few key players, Valor learned.
The format of InterCement’s sale hinges on its reorganization process. The company ranks third in market share, following Votorantim and Companhia Siderúrgica Nacional (CSN), and is second in production capacity.
InterCement was on the verge of being sold to Benjamin Steinbruch’s group. However, negotiations fell through last year due to the appreciation of the company’s assets in Argentina, specifically the cement company Loma Negra, and disagreements between bondholders and Mover shareholders, according to sources.
Four other groups—Votorantim, Polimix, Buzzi, and Vicat—competed for InterCement’s assets piece by piece last year. The company’s debts amount to approximately R$14.2 billion. Except for Votorantim, which has a significant national presence with factories in 17 states, the other three companies are seeking to expand their businesses in the Central-West, Northeast, and Southeast regions, according to a person familiar with the matter.
In the scenario of a piecemeal sale of InterCement’s assets, Votorantim Cimentos, which faces restrictions on new acquisitions in the sector, would acquire units in the Central-West and Northeast regions where the company’s businesses do not overlap.
Buzzi, Polimix, and Vicat were eyeing factories in the Southeast, particularly in Minas Gerais and São Paulo, considered strategic.
Until last year, CSN was considered the clear favorite to acquire the rival company, according to another informed source. However, with high leverage at the holding level, CSN is not currently seen as an obvious buyer for the business—up until last year, the company was interested in acquiring operations in Brazil and Argentina.
Sources close to CSN assert that the company does not rule out seeking a partner for its cement division, which has grown significantly in recent years through key acquisitions, including the assets of LafargeHolcim and Elizabeth Cimentos. Selling a minority stake, as happened with its mining arm, could help Mr. Steinbruch’s group accelerate its deleveraging process, enabling potential new acquisitions.
Although debt reduction is currently a priority within CSN, asset purchases are not entirely off the table, one source said. “As long as the agreed leverage levels with creditors are respected, it would be a possibility,” they said.
According to another insider, the first attempt to acquire InterCement was also thwarted due to the impact it would have on the group’s indebtedness. CSN proposed to restructure the cement company’s debts and acquire the assets without disbursing cash or raising new capital, but no agreement was reached with the creditors.
InterCement’s court-supervised reorganization request, filed in early December, marks the third such filing by cement companies since 2021, following Tupi and João Santos. For experts interviewed by Valor, this is not a problem specific to the cement segment but rather longstanding management issues within the companies.
The sector had a positive year in 2024. According to the Brazilian Cement Industry Association (SNIC), 64.7 million tonnes of the material were sold, a 4% increase, exceeding expectations. In 2023 and 2022, the balance had been negative at 1.7% and 2.8%, respectively.
A modest 1% increase is expected in 2025. Paulo Camillo Penna, president of SNIC, notes that the amount sold is still far from the sector’s peak in 2014 when 73 million tonnes were sold, “with less production capacity.” At that time, Brazil had a production capacity of 89 million tonnes, compared to the current 93 million. The sector operates with 30% idle capacity.
This unused capacity is one reason the market is skeptical about the entry of new investors into the cement industry.
According to an industry expert, who requested anonymity, Benjamin Steinbruch’s company is still likely to acquire InterCement’s assets sooner or later. If the cement company manages to recover through court-supervised reorganization, a scenario he considers “remote,” it is expected to make another sale attempt when possible, with CSN remaining the most likely buyer.
If the court-supervised reorganization process does not go well, InterCement’s creditor banks are expected to claim the assets and auction them off—a prime opportunity for CSN to acquire the assets at a lower price.
According to a source close to the group, CSN is interested in new acquisitions, provided they respect leverage limits, to further expand in cement. In the third quarter, the latest available data, the division accounted for 11% of the consolidated net revenue of R$11 billion and 15.3% of the R$2.3 billion in earnings before interest, taxes, depreciation, and amortization (EBITDA). CSN currently can produce 17 million tonnes of cement annually, with plans to expand this amount to 26 million.
Despite a challenging pricing environment in 2024, the company saw synergies in integrating the assets acquired in recent years and the business margins.
Votorantim Cimentos, the leader in production volume in Brazil, may have an interest in assets in regions where it does not have factories, according to the source, but has focused more on international expansion, particularly in the United States, rather than in Brazil. As the largest producer, with 24 factories (compared to CSN’s 13 and InterCement’s 15) and double the installed capacity of its main competitors, the company could be blocked by Brazil’s antitrust regulator CADE.
CSN is also subject to remedies, depending on the region of the assets.
Smaller cement companies are seen as potential buyers of InterCement assets if they cooperate. According to an industry source, they could acquire plants that may be part of possible remedies imposed by CADE on another larger buyer.
The sector is concentrated—the three largest producers hold over 50% of the market share and 74% of the country’s installed capacity. Still, smaller local producers dominate their regions, as cement is known for “not traveling well.” Due to its weight, freight is expensive relative to the product’s price, and it spoils if it gets wet during shipping. Producing companies need to have factories near sales locations, making national coverage difficult.
Local companies like Mizu, part of the Polimix group, have been performing well. In 2023, the company had nine factories in nine states and was one of the country’s five largest producers. In November, it reactivated a factory that belonged to the João Santos group in Sergipe, acquired at auction. It also purchased Cimentos do Maranhão (Cimar) in 2024, formerly owned by the Cornélio Brennand and Queiroz Galvão families, and two quarries from the Queiroz Galvão group in Ceará and Rio de Janeiro.
The Chinese company Huaxin Cement also invested in quarries, acquiring the Embu quarry for $186 million in mid-December. It is the country’s second-largest quarry. During the initial negotiations for InterCement assets, Huaxin was among those interested in the factories.
According to experts, the entry of a Chinese competitor would be good news for cement consumers but “a risk” for domestic producers, as it could impose intense price competition. An industry source considers that the Chinese could be attracted by the cement industry’s “relatively good” margins, noting that China “generally invests in what it can import,” and cement does not fall into that category.
Construction businesspeople interviewed by Valor under the condition of anonymity do not see the possibility of a new competitor entering the market given its high entry barrier. A further concentration of production in a few companies is not concerning—the analysis is that it would make little difference in a sector already seen as a cartel.
The three major companies mentioned, Votorantim Cimentos, CSN Cimentos, and InterCement have either gone public or are expected to do so. InterCement and CSN attempted to advance the process in 2021 and 2022 but withdrew due to the market window closing.
InterCement’s reorganization is not expected to affect the market’s perception of the other two, according to the analyst. Being part of holding companies that operate in diversified segments helps. “If cement underperforms, iron ore or steel does well, ensuring balanced results,” the source says. Even if the IPO represents a separation of the business, investors would have a different perspective. That does not apply to smaller companies, the source notes.
The president of SNIC points out that these companies’ reorganization is not expected to impact cement supply in the country as there is high idle capacity. “The market is well-served,” Mr. Penna stated.
Contacted by Valor, Votorantim Cimentos stated in a note that in February 2024, it announced through a notice of material fact it had made an individual and independent offer to acquire part of InterCement Brasil’s assets. “The offer was made within a competitive process, and its confidential terms outline usual precedent conditions for such a deal, including express prior approval by the Brazilian antitrust regulator, the Administrative Council for Economic Defense (CADE).”
The company also stated that “it is not part of and does not lead any consortium aiming to acquire these assets” and that “to date, no documents have been signed with any counterpart that would generate a firm obligation or commitment to acquire the assets that were the subject of the offer.”
CSN Cimentos and InterCement said they would not comment, as did the French company Vicat, which acquired a majority stake in Ciplan in 2019.
Valor also reached out to Huaxin—who did not respond to the interview request—and was unable to contact Polimix. Buzzi said it does not respond to press inquiries.
*By Ana Luiza Tieghi, Mônica Scaramuzzo e Stella Fontes — São Paulo
Source: Valor International
U.S. cites Brazil as an example of trade imbalances
03/05/2025
The Donald Trump administration has once again raised concerns over high import tariffs in Brazil, even as it implements new tariffs of 25% on products from Mexico and Canada and 10% on Chinese goods, further disrupting the global economy.
The Office of the U.S. Trade Representative (USTR) submitted Trump’s 2025 Trade Policy Agenda to Congress on Monday (3), along with a report on the country’s activities within the World Trade Organization (WTO), an institution increasingly sidelined by Mr. Trump’s unilateral approach.
The Trump administration argues that for decades, the U.S. “gave away its leverage by allowing free access to its valuable market without obtaining fair treatment in return.” This, it claims, has weakened the country’s industrial base, middle class, and national security.
It also blames the WTO for failing to reduce disparities in global trade. To illustrate the imbalance, the U.S. report compares its bound tariff rate of 3.4%—with an applied rate of 3.3% in 2023—to those of other nations. Brazil’s bound tariff was 31.4%, with an applied rate of 11.2%, while India’s stood at 50.6% and 17%, respectively. A bound tariff is the maximum rate a country can impose under WTO agreements.
“Going forward, the United States will take action to create the leverage needed to rebalance our trading relations and to re-shore production, including, but not limited to, through the use of tariffs,” said Jamieson Greer, the newly appointed U.S. Trade Representative. “This will raise wages and promote a strong national defense.”
He added, “The current moment demands action to put America First on trade, and the Trade Agenda explains the importance of President Trump’s trade policy to American workers and businesses.”
The Trump administration claims much of the country’s industrial power has shifted overseas, stalling innovation. It points to a decline in U.S. manufacturing jobs from 17 million in 1993 to 12 million in 2016, the closure of over 100,000 factories between 1997 and 2016, and a trade deficit in goods exceeding $1 trillion.
For Mr. Trump’s team, the culprit is clear: “These trends are the product of a withering, decades-long assault by globalist elites who have pursued policies—including trade policies—with the aim of enriching themselves at the expense of the working people of the United States. As a result, the middle class has atrophied, and our national security is at the mercy of fragile international supply chains.”
The USTR asserts that only Mr. Trump has recognized the role trade policy has played in this situation and how it can be corrected—specifically through tariffs as a “legitimate tool of public policy” to counter foreign products.
“He has demonstrated the imperative for tough trade enforcement against countries who think they can take advantage of the United States and get away with it,” the document said. “He has shown that the United States has leverage and can negotiate aggressively to open markets for Made in America exports, particularly for agricultural exports.”
The USTR also said it would identify opportunities for trade agreements that could expand market access for U.S. exports “and reorient the trading system to promote U.S. competitiveness.”
A major focus remains China, described as “the single biggest source of our country’s large and persistent trade deficit and a unique economic challenge.” The report makes clear that pressure on Beijing will continue to intensify.
“The U.S. is still a superpower,” the Trump administration asserted, adding that “from this moment on, America’s decline is over.”
The administration is also reviewing the impact of WTO agreements on U.S. interests, as well as the costs, benefits, and overall value of continued participation in the organization. It criticizes what it calls the WTO’s “persistent systemic failures” and the “intransigence of certain WTO members” that have prevented the U.S. from fully benefiting from the institution.
Targeting China, the report claims the WTO has been ineffective in addressing non-market policies and practices, enforcing agreed rules, implementing reforms, or fostering meaningful negotiations—without acknowledging the U.S.’s own role in these challenges.
The Trump administration signals that its patience is wearing thin, warning that the political, economic, and trade landscape in 2025 is vastly different from previous years. It insists the U.S. will continue pursuing “new paths” in global trade.
Mr. Trump’s unilateralism and intimidation tactics remain as forceful as ever, leaving trade partners with a stark choice: comply with U.S. demands or face retaliation.
*By Assis Moreira — Geneva
Source: Valor International