Government cuts import tariffs on food items to fight inflation

Executive package eliminates tariffs on products such as meat and sugar, includes regulatory measures and incentives to boost staple food production in the next Plano Safra

03/07/2025

Amid mounting pressure and declining approval ratings, President Lula’s administration announced on Thursday (6) a package of measures aimed at reducing food prices in Brazil.

Import tariffs on several items, including coffee, sugar, and meat, will be eliminated. The package also includes regulatory initiatives and incentives to encourage the production of staple foods under the next Plano Safra, Brazil’s main agricultural financing program. The government will also ask state administrations to remove ICMS, a state-level tax, on these essential food products.

The announcement was made by Vice President Geraldo Alckmin after an afternoon of meetings with ministers and private-sector representatives at the Planalto Palace. Mr. Lula did not take part in the discussions, despite the meeting being scheduled on his official agenda. Mr. Alckmin said the president had approved the initiatives. The government has yet to calculate the impact of these measures on tax revenue.

Vice President Alckmin said the import tariffs to be eliminated include those on meat, currently at 10.8%, coffee at 9%, sugar at 14%, corn at 7.2%, sunflower oil at 9%, olive oil at 9%, sardines at 32%, biscuits at 16.2%, and pasta at 14.4%.

Regarding corn, Mr. Alckmin said the exemption would have “significant effects on the cost of eggs and animal proteins, such as meat.” Inflation in these food categories has been cited in surveys as a key factor in public dissatisfaction with the president.

Mr. Alckmin also announced an increase in the duty-free import quota for palm oil from 65,000 tonnes to 150,000 tonnes.

The tax reduction measures still need approval from the Executive Management Committee (GECEX) of CAMEX, Brazil’s Foreign Trade Chamber, with no set timeline for review. The exemptions will not have a predetermined expiration date.

“It’s hard to set a date, but it’s a matter of days. Once we receive the technical notes from the ministries, the new tariffs will take effect within a few days,” Mr. Alckmin said. He added that while specific impact estimates for each product were not yet available, the goal is to lower consumer prices.

Mr. Alckmin also said the government and supermarket sector are studying ways to publicize the best prices as a means to “stimulate competition and benefit consumers.” However, he did not provide details on how this would be implemented.

Staple food

Another initiative will be to ask state governors to eliminate state taxes on staple food products. The vice president noted that federal taxes on these items have already been removed, but some states still apply ICMS to essential food goods.

He added that this is the “first set of measures” agreed upon with the private sector. He also clarified that discussions did not include an export tax on Brazilian agricultural products, an idea that had been previously considered by the government.

The government also plans to strengthen food stockpiles and provide incentives in the next Plano Safra to boost staple food production. Mr. Alckmin did not confirm whether additional budget resources would be allocated for food stockpiling by CONAB, the National Food Supply Company, but assured that the state-owned entity would have the “necessary resources.” The proposed budget for this year, still pending congressional approval, includes only R$189 million for purchasing rice, beans, and corn.

For the Plano Safra, the aim is to extend low-interest financing to medium-sized farmers growing key crops, as previously reported by Valor. “The PRONAF, National Program for Strengthening Family Farming, already prioritizes lower interest rates to support staple food production. The idea now is to extend these subsidies to PRONAMP, which supports medium-sized farmers,” said Agrarian Development Minister Paulo Teixeira. “This will allow for a broader range of subsidized products focused on the staple food basket. We will extend these subsidies to medium-sized producers.”

Agriculture Minister Carlos Fávaro announced that for one year, the Brazilian Animal Product Inspection System (SISBI) will recognize products inspected under municipal oversight (SIM), allowing them to be sold nationwide. This policy will apply to milk, honey, and eggs, which were previously restricted to local markets.

“For one year, we will grant nationwide validity to SIM certifications. Products that pose no sanitary risks—such as fluid milk, honey, and eggs—can now be sold across Brazil without compromising food safety,” Mr. Fávaro said during the announcement.

People familiar with the matter told Valor that the meeting included heated debates and disagreements.

One key dispute arose when the government suggested indefinitely maintaining biofuel blending mandates for diesel and gasoline. The proposal upset producers, despite government officials arguing that higher blending levels—particularly for biodiesel and corn ethanol—increase animal feed costs. Industry representatives disagreed, asserting that greater biofuel production actually increases the availability of soybean meal and corn distillers’ grains (DDG), which are essential for animal feed.

Another contentious issue was the government’s proposal to create an app to display which supermarkets offer the lowest prices for certain products. Business associations argued that this could unfairly pressure small and medium-sized retailers, as large chains with greater scale could afford deeper discounts and promotions.

Industry representatives also urged the government to reconsider the recent increase in import taxes on plastic packaging, citing concerns over cost pressures on food producers.

*By Fabio Murakawa e Rafael Walendorff — Brasília

Source: Valor International

https://valorinternational.globo.com/
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Circuit court reinstates antitrust ruling against Apple

Federal Regional Court of 1st Region gives company 90 days to implement app market changes ordered by CADE

03/06/2025

The Federal Regional Court of the 1st Region (TRF-1) has overturned a trial ruling and reinstated an injunction imposed by the Administrative Council for Economic Defense (Cade) on Apple, as part of an investigation into alleged abuse of dominant position in the app distribution market for iOS devices. According to the ruling, the company will have 90 days to implement the changes mandated by the antitrust authority.

At the end of November, Cade’s General Superintendence launched an administrative proceeding against Apple to investigate suspicions of dominant position abuse and issued a series of injunctions to allow, for example, apps to inform users about alternative means of purchasing the products they offer.

Apple subsequently won a ruling from the Federal Court of the Federal District to overturn the injunctions. However, Second Judge Pablo Zuniga of TRF-1 reversed that ruling on the afternoon of February 5.

According to the federal judge, Apple’s argument that there is no urgency in implementing the changes imposed by Cade’s technical department is unfounded. “The closed structure of iOS and the restrictions imposed on third-party app sales are precisely the factors that justify the preventive action of the antitrust authority, as maintaining them without any intervention may hinder the entry of new competitors and impede the restoration of competition in the sector,” the judge noted.

However, Judge Zuniga granted Apple more time to implement the changes. Now, the company will have 90 days to adopt the procedures mandated by Cade, compared to the initially stipulated 20 days.

The magistrate also noted that the injunction “does not hinder Apple’s business model but only imposes adjustments that can be reversed if the final decision in the administrative process is favorable to the aggrieved party.”

“Apple has already complied with similar obligations in other countries without demonstrating significant impact or irreparable harm to its economic model,” the judge pointed out. “The implementation of structural changes in operating systems, indeed, requires some planning and technical development, which may demand more time than stipulated in the administrative decision,” he considered in the ruling.

Furthermore, he wrote that regarding the urgency of the injunction, “it arises from the fast-paced dynamic of the technology market, in which the duration of an anticompetitive practice can determine its irreversibility, even if later deemed illicit.”

The case reached Cade in 2022 following a complaint by marketplace Mercado Livre. The company alleged that Apple was abusing its dominant position in the app distribution market for iOS devices.

The antitrust body argues that big tech companies impose a series of restrictions on app developers of digital goods and services regarding in-app purchases, configuring a dominant position.

In a statement to Valor, Apple said that the preventive measures imposed by the Administrative Council for Economic Defense (Cade), now reinstated by the Federal Regional Court of the 1st Region, may “compromise the privacy and security of our users,” and vowed to appeal the decision.

“Apple believes in vibrant and competitive markets where innovation can flourish. We face competition in every segment and jurisdiction where we operate, and our focus is always the trust of our users,” the statement reads.

*By Guilherme Pimenta, Valor — Brasília

Source: Valor International

https://valorinternational.globo.com/
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Government gathers industry, retailers amid blame game over inflation

Meeting follows industry’s claim that stores fail to pass on price reductions

03/06/2025

Facing low approval ratings for President Lula, the Brazilian government has convened a second round of meetings within a week with business representatives to seek support in curbing food inflation. This step comes amid a blame game between industries and retailers over the past few days, with no concrete actions defined after last week’s ministerial meetings with sector leaders, as reported by Valor.

A new round of discussions is scheduled for Thursday (6) between the federal government and associations representing sectors such as meat packing, sugar and alcohol, vegetable oils, biodiesel, retailers, and wholesalers. Sources indicate this agenda was organized at the last minute, late Wednesday (5).

Approximately 30 government and sector representatives are confirmed to attend the meeting, the first to involve the entire production and distribution chain since the spike in food prices. “The government wants quick actions and demands measures that generate positive political effects,” said a wholesale company’s executive.

On Thursday (27), Agriculture and Minister Carlos Fávaro and Agrarian Development Minister Paulo Teixeira met with representatives of these same sectors. Hours later, Mr. Fávaro met with supermarket and wholesale leaders in a discussion that extended into the night with no significant progress.

The government’s move last week coincided with the release of a Genial/Quaest survey showing President Lula would only defeat Jair Bolsonaro in a runoff round in the states of Bahia and Pernambuco.

During the previous meetings, industry and retail leaders were questioned about passing on certain food price reductions to the market and asserted to ministers that they were not responsible for high prices. These discussions occurred separately with each sector.

“Everyone was passing the buck, but they all know the problem lies with the government, which needs to cut expenses and restore market and public confidence, not with the companies. However, this was not addressed in the meetings,” said a source familiar with the matter.

According to two sources consulted after the meetings, there is increased pressure from the government than in previous meetings, especially with retailers. However, for a third source, nothing unexpected was seen in the meetings and the level of pressure was natural. “That is normal; in their position, I would adopt the same stance,” a producer said.

Representatives from the soybean oil and meat sectors questioned the trade sector’s stance, reporting that many retailers and wholesalers are slow to pass on recent price drops.

Meatpacking companies said retail and wholesale sectors have not fully passed on the reductions in meat prices in 2025. However, later, during discussions with retailers, supermarket representatives claimed this had occurred and that the reductions submitted by producers were minimal compared to last year’s significant increase.

Meat packing industry leaders indicated during the meeting that there had been a nearly 15% reduction in meat prices at the farm and processing plant levels earlier this year and pointed out that there is potential for further declines over the year.

Minister Fávaro advocated for a faster reduction in soybean oil prices in stores and urged the sector to propose solutions. According to the Extended Consumer Price Index (IPCA) measured by the Brazilian Institute of Geography and Statistics (IBGE), soybean oil’s price rose 18.7% in 2024 and 5.1% in December alone. Industry representatives revealed graphs portraying declining prices and photos of prices in Brasília supermarkets.

Additionally, producers suggested temporarily eliminating import tariffs on crude soybean oil (9%) and packaged refined soybean oil (10.8%).

This suggestion was influenced by the 2023/24 soybean crop failure and strong domestic demand, largely from the biodiesel industry. “Eliminating import taxes aims to offer the government a concrete short-term solution. I don’t know if they will find it sufficient, but it provides something competitive,” a source said.

The potential expansion of wheat import quotas is also an issue on the government’s agenda. A strategy of taxing soybean, corn, meat, and ethanol exports remains without consensus in the government.

When meeting with retail leaders, Mr. Fávaro questioned the price increases and the pace of passing on price fluctuations. Supermarket representatives argued that price moves have reached consumers and added that the sector’s net margins are below average, affected by Lula’s administration’s high interest rates.

“We stated that the situation is normal. In other words, what we receive from producers is passed on to consumers. It’s impossible to speculate, as the most inflated products are perishable and cannot be stocked,” said a segment spokesperson.

A price table for meats, considering average prices, was reportedly presented to the ministry, showing that from October to December, the price variations received from meatpacking plants were almost entirely passed on. In January, the table indicated an average 2% price decrease from meatpacking plants to retailers compared to December.

The reduction retailers receive from producers is passed on the following month, and not immediately.

“Meat attracts foot traffic in stores; if the price drops had been more significant, we would have passed them on as it’s in our interest,” a wholesale CEO said.

According to three sources, the minister suggested that industry and retail agreed to a commitment to ensure that all price reductions would reach consumers. “There was an understanding that companies could monitor everything, both increases and decreases,” said a vice president of a wholesale chain.

Representatives argued that this already occurs, according to each company’s strategies. However, sector entities do not account for the decisions of their members, who are competitors and operate in a free market with no government interference.

On Friday (28), after both meetings, expectations were that measures to curb rising food prices would be discussed in a meeting between Mr. Fávaro and Mr. Lula. However, the conversation did not progress as it would require deeper engagement of sectors and companies, Valor learned.

For both producers and retailers, there is no government focus on actions that could impact companies’ productivity or efficiency, resulting in potential price reductions.

At the end of November, supermarket representatives had submitted suggestions to the government, including greater flexibility in labor contracts due to payroll costs, as well as creating a new price validity marker for a basket of products without eliminating expiration dates. That could reduce sector losses, potentially impacting prices.

These topics have not advanced since initial discussions and were not the government’s focus in the meeting.

From the perspective of beef and pork producers, technical issues that could enhance productivity were also presented at the meeting.

Privately, companies associated with entities that have been meeting with the government told Valor that the rise in food inflation is partly due to a weaker real against the dollar, amid a tense external environment with Donald Trump’s administration, along with new pressures such as avian flu and crop failures. However, there is also a loss of investor confidence in the government due to a lack of clear measures to contain public spending.

In the round of meetings scheduled for Thursday (6), two sessions will be coordinated by Vice President and Minister of Development, Industry, Commerce, and Services (MDIC) Geraldo Alckmin. There is no confirmation of President Lula’s participation or an announcement of measures.

The first session will include ministers Fávaro and Teixeira and representatives from the Ministry of Finance. In the afternoon, the meeting will be attended by retail representatives and producers. The MDIC did not respond when contacted.

When contacted on Wednesday (5), the Ministry of Agriculture, the Ministry of Agrarian Development, and supermarket association ABRAS did not comment. ABIEC (beef exporters’ association) chose not to comment. ABAD, representing wholesalers, said it would make all efforts to counter inflation threats and support a competitive and legally secure country.

*By Adriana Mattos e Rafael Walendorff — São Paulo and Brasília

Source: Valor International

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Brazil may align dividend taxation with OECD model

Government considers an approach that combines corporate and dividend taxes as it discusses income tax reform and an increase in the exemption threshold

03/06/2025

The Brazilian government plans to implement income tax on dividends based on a model used by the Organization for Economic Cooperation and Development (OECD), a member of the economic team told Valor. In this approach, taxes paid by the company and those levied on dividends are considered together.

This measure is part of the broader income tax reform the government intends to submit to Congress soon. The centerpiece of the proposal is raising the personal income tax exemption threshold to R$5,000.

This increase would lead to a revenue loss of approximately R$35 billion, which the government aims to offset by introducing a minimum tax rate of up to 10% for individuals earning more than R$50,000 per month—covering all types of income, including dividends.

“It is very common for countries to assess taxation collectively, considering both the entity paying the income (the company) and the recipient (the shareholder),” the source said. “It makes sense.”

In Brazil, individuals with higher incomes pay relatively little tax as individuals compared to salaried workers, who are taxed at the source, the official noted. However, corporate taxation must be taken into account. When both are considered, the tax burden on the wealthy is not as low as it may seem.

To understand how the OECD applies taxes on dividends, Valor consulted tax experts.

“There are several possible models,” said Daniel Loria, a partner at Loria Advogados and former director at the Secretariat for Tax Reform. He said he was unsure how Brazil’s tax authority would integrate OECD rules into the income tax reform.

Generally, he explained, countries tax dividend distributions but grant tax credits for corporate taxes already paid. If applied in Brazil, this model could mean dividends would be taxed at up to 27.5% under the individual income tax (IRPF) table, but with a tax credit corresponding to the corporate income tax (IRPJ) and Social Contribution on Net Profit (CSLL) paid by the company.

However, OECD countries have increasingly abandoned this tax credit model in favor of a split-rate system, said Helena Trentini, a tax lawyer who previously worked at the OECD and is now a partner at Heleno Torres Advogados.

In Ireland, for example, corporate profits are taxed at 12%, while dividends face a 51% tax rate. Lithuania employs a more balanced approach, with 15% taxation on both corporate profits and dividends.

Ms. Trentini said the goal in many countries is to reduce corporate income tax rates to encourage economic activity.

She noted that, in Brazil, the discussion is happening in a context where the government is seeking to increase tax revenue to offset losses from raising the exemption threshold. The risk, she warned, is that the reform could end up only imposing taxes on dividends without following the global trend of lowering corporate income tax.

Currently, corporate income in Brazil is taxed at 34%, considering both IRPJ and CSLL. “That’s very high,” she said. By comparison, the U.S., the U.K., and the Netherlands levy corporate taxes at 25%.

“If you add dividend taxation to the existing 34% corporate tax rate, the result would be a completely distorted tax burden—one that does not exist in any other country,” Ms. Trentini warned.

The fiscal impact of the proposed changes remains uncertain, she added. “It’s unclear how much revenue could be generated from dividend taxation, as many companies may simply stop distributing them.”

Longstanding tax structure

Ms. Trentini explained that Brazil’s high corporate tax rate is rooted in a 1995 reform that merged dividend taxation with corporate income tax. This change was made to simplify tax enforcement by concentrating taxation at the corporate level, leaving dividends exempt.

Because of this, experts argue that dividends in Brazil are not truly exempt, as is often claimed. “That’s a lie,” said Tiago Conde Teixeira, a partner at law firm SCMD Advogados. “Dividends are taxed, just at the corporate level.”

In his view, the government’s plan to tax dividends at the individual level amounts to double taxation—applying the same tax to the same income twice. “That is unconstitutional,” he said.

The OECD’s split-rate system offers more incentives for reinvestment than Brazil’s current model, Ms. Trentini said. Currently, from a tax perspective, there is no difference between using profits to expand a business or distributing them as dividends, since the entire amount is taxed at 34% upfront.

Under a split-rate system, however, corporate tax rates would be lower, encouraging reinvestment.

For example, if a company earns R$100 in profit and faces a 25% corporate tax rate, it would pay R$25 in taxes, leaving R$75. If the company reinvests the R$75, no additional tax is levied. If, instead, it distributes the amount as dividends, an additional tax—around 15%—would apply.

This approach ensures more funds remain available for reinvestment, free from further taxation, while dividend distributions would be subject to additional taxes.

Raising the IRPF exemption threshold to R$5,000 poses a risk to public finances, according to experts, as the outcome of congressional debates is uncertain. Lawmakers have already voiced opposition to tax hikes, even for high-income earners. If the proposed revenue offsets fail to materialize, the expected tax shortfall may not be fully compensated, contrary to what Finance Minister Fernando Haddad has argued.

Beyond fiscal concerns, the new exemption threshold could also clash with the Central Bank’s inflation-control strategy.

Rafaela Vitória, chief economist at Banco Inter, said that in today’s tight labor market, the increased disposable income from tax cuts would drive up middle-class consumption, potentially fueling inflation. “For 2026, however, it’s still too early to predict, as it will depend on how economic activity and job creation evolve throughout the year,” she noted.

“Increasing spending, whether through greater transfers or income tax cuts, in an economy already near full capacity won’t lead to growth—only more inflation,” she said.

Felipe Salto, partner and chief economist at Warren Rena, argued that even with fiscal neutrality, the overall impact on economic demand would likely be positive, putting upward pressure on inflation.

That’s because, he explained, even if the government finds ways to fully offset lost revenue, the burden of new taxation may fall primarily on wealthier segments of the population.

*By Lu Aiko Otta e Guilherme Pimenta — Brasília

Source: Valor International

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Trump’s tariffs unlikely to impact Brazil immediately, economists say

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

https://valorinternational.globo.com/
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InterCement crisis to reshuffle industry’s landscape

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

https://valorinternational.globo.com/
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Trump targets Brazilian tariffs again

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

https://valorinternational.globo.com/
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