Brazil rejects EU stance on antimicrobial controls

Agriculture Ministry demands reinstatement as approved animal-product exporter

Brazil’s Ministry of Agriculture has hardened its tone toward the European Union, calling it “unacceptable” for the bloc to require advance proof that Brazil controls antimicrobial use throughout the entire lives of animals whose meat will be exported to EU countries. In a statement , the ministry demanded that Brazil be reinstated on the list of countries authorized to export animal products to the bloc.

Meat-industry sources interpreted the statement as the government arguing that reinstatement should occur regardless of whether Brazil has products that comply with the rules by September, when the restriction takes effect. The position also reinforced the view that the ministry will not ban antimicrobial use nationwide, as poultry and beef processors had requested.

The Agriculture Ministry recently adopted full-life-cycle monitoring of antimicrobial use across different production chains. In the beef industry, for example, certifying cattle as free from substances prohibited by the EU could take at least two years. In poultry production, the process is faster, at approximately 40 days.

“Brazil supports maintaining this system and considers it unacceptable to require advance proof that measures have been fully implemented when their execution occurs progressively over the course of production cycles,” the ministry added in the statement.

The Agriculture Ministry also noted that “international relations on sanitary matters are structured around a fundamental principle: trust and transparency between the competent authorities.” It added that international recognition of official sanitary-control systems “is based on a country’s demonstrated capacity to establish rules, enforce compliance, adopt corrective measures—when necessary—and credibly certify products that meet the requirements and measures agreed bilaterally.”

In addition to defending Brazil’s control system, the ministry said it remains engaged in technical discussions with the EU concerning the sanitary requirements governing antimicrobial use in animal production.

According to the government, Brazil has not asked the bloc to relax its sanitary rules to preserve animal-product exports and remains fully committed to meeting the requirements established by importing markets.

Two meat-industry sources said the message to European authorities is that Brazil will not accept having the credibility of its sanitary system called into question during the dispute.

In its statement, the Agriculture Ministry argued that “the system’s credibility lies precisely in the competent authority’s ability to prevent the certification of products that do not yet meet the applicable requirements.”

The ministry, headed by André de Paula, also emphasized that the government assurances provided by Brazil “concern the reliability of the official inspection and certification system, while the availability of eligible products results from implementing those assurances throughout the respective production cycles. These are distinct and complementary aspects of the process of complying with sanitary requirements.”

The ministry said documents sent to the European Union detail official inspection mechanisms and control guarantees for the beef, poultry, egg, honey, and fishery-product supply chains. According to the ministry, Brazil’s system ensures “verification of implementation, inspection, traceability, monitoring, and certification of compliance with the sanitary requirements established by the EU.”

In May, the European Commission announced that Brazil would be removed from the list of countries authorized to export animal products to the bloc beginning September 3, citing failures to prove that antimicrobials were not being used in Brazilian production chains.

The meatpacking industry called for a nationwide ban on antimicrobials to signal to the EU that Brazil would ensure supplies of meat and related products made without the substances. Producers, however, said a ban could increase feed and medication costs.

*By Rafael Walendorff — Brasília

Source: Valor International

https://valorinternational.globo.com/

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Clean energy gains ground in Brazil’s remote regions

Advances in biodigesters and hybrid systems expand electricity access

 

 

Vila Restauração, in Acre state: electricity in an isolated community — Foto: Divugaão/Grupo Energisa
Vila Restauração, in Acre state: electricity in an isolated community — Photo: Divugaão/Grupo Energisa

In Vila Restauração, a community on the banks of the Tejo River in Acre, electricity was available for only three hours a day—the length of time its diesel generator operated. After that, the community returned to darkness. Food could not be refrigerated, the health clinic struggled to preserve vaccines and medications, and much of the local economic activity came to a halt. Today, a power plant combining solar panels, lithium-ion batteries, and biodiesel generators provides electricity 24 hours a day.

Installing the system required an investment of R$20 million and a complex logistics operation. About 200 tonnes of equipment traveled along highways and Amazonian rivers to reach the community, a journey that included more than seven days by boat. “The main lesson is that providing reliable energy to remote areas requires solutions designed for the realities of each location,” said Gabriel Mussi, director of major clients at (re)Energisa, the Energisa group’s energy-transition company and the organization responsible for the project.

With electricity available throughout the day, the health clinic can now store vaccines and medications safely, merchants have installed refrigerators and freezers, the school has permanent internet access, and mobile-phone coverage has enabled residents to use banking services and electronic payment methods.

“We suffered a great deal here in the dark. A lot of food spoiled because we had no way to preserve it. When we saw the lights come on, the entire community was overjoyed,” said Maria Ivone Cunha, a Vila Restauração resident.

The project in the Acre community is part of a strategy gaining ground in regions where extending the power grid remains difficult or expensive. Instead of relying exclusively on the construction of new transmission lines, these areas are receiving systems that combine different generation and storage technologies to ensure a reliable energy supply.

Falling solar-panel prices, advances in batteries, and the development of control systems have expanded the adoption of hybrid systems in regions where extending the power grid remains unfeasible. Combining solar generation, storage, and conventional generators is reducing fossil-fuel use without compromising supply reliability.

One example is Caiambé, Amazonas, where a hybrid plant combining diesel generation, solar power, and battery storage has begun operating. The system is expected to reduce diesel use by about 130,000 liters a year and avoid approximately 405 tonnes of carbon dioxide emissions annually.

The initiative is part of an effort to modernize so-called isolated systems, which still depend heavily on fossil fuels to supply communities that are not connected to Brazil’s National Interconnected System. Similar models are expected to spread over the coming years as new technologies become more affordable.

Rafael Segrera, Schneider Electric’s president for South America, said Brazil offers favorable conditions for expanding this model. However, it requires investment in technology and professional training. The company recently opened a sustainable energy hub in Amazonas focused on developing and disseminating solutions adapted to local conditions.

Most of these initiatives are concentrated in the region, where nearly all of Brazil’s isolated power systems are located. In these areas, combining different generation sources has proved a viable way to reduce diesel use without compromising supply reliability.

“Brazil has highly favorable conditions for accelerating this expansion. In addition to having a power mix comprising approximately 84% renewable sources and some of the world’s greatest potential for clean-energy generation, the country has technological capabilities and an increasingly favorable environment for innovation in electrification, automation, and digitalization,” he said. According to Segrera, the next step is to expand workforce training so professionals can install and operate these systems in different parts of the country.

The approach of producing energy close to where it will be consumed is also advancing beyond isolated Amazonian communities. In rural areas, instead of solar panels and batteries, the fuel may be generated daily on the property itself. Animal waste feeds biodigesters, where microorganisms convert organic matter into biogas.

The material remaining at the end of the process can also be used as biofertilizer on crops. In addition to reducing electricity and fuel costs, the technology gives agricultural and livestock waste a productive use.

Felipe Marques, CEO of CIBiogás, said the technology’s potential is likely to grow alongside the expansion of animal-protein production. “The country is on track to remain a leading exporter of animal protein, particularly given the prospect of increased demand in Asia and the new trade agreement with the European Union. As a result, even more protein production will be connected to the biogas and biomethane agenda and a just energy transition,” he said.

The projects also reflect a change in the approach to electrification investment. Rather than adopting a single solution for the entire country, a model is gaining ground that combines different technologies according to each region’s characteristics, bringing generation closer to consumers and reducing reliance on major infrastructure projects.

According to Mussi, this trend should become firmly established as projects are adapted to the needs of each location. “In a country with geographic conditions as diverse as Brazil’s, there is no single solution for achieving universal access to energy.”

The Energy Transition project is an initiative of the newspapers Valor and O Globo, sponsored by Vale.

*By Mario Camera — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Broader fiscal gauge shows stimulus rising to 4.52% of GDP

Indicator combining government credit and unpaid budget obligations more than doubled in the second quarter, driven mainly by financial disbursements

 

 

 

 

The fiscal impulse delivered by Brazil’s federal government through credit and the so-called float from unpaid budget obligations reached 4.52% of gross domestic product in the second quarter, or roughly R$150 billion.

The estimate comes from economist Alexandre Manoel, of consultancy Global Intelligence and Analytics. In the first quarter, his Expanded Fiscal Expansion Monitor, known by its Portuguese acronym Mefa, stood at 2.19% of GDP. The indicator more than doubled in the following three months, driven mainly by credit operations.

Mefa combines credit, other Treasury financial disbursements used to carry out public policies and the float from so-called restos a pagar, or spending authorized under previous budgets but not yet paid.

Manoel plans to publish the indicator quarterly. His goal is to provide a broader picture of the stimulus the federal government is transmitting to the economy. The higher the Mefa reading, the stronger the impulse.

Economists say measures adopted by the government during this election year have made it harder to ensure fiscal sustainability and for the Central Bank to bring inflation under control. Programs captured by the indicator include Move Brasil, a vehicle-financing initiative, and the expansion of public funds.

Broader measure

Manoel argues that the traditional fiscal yardstick, the primary balance — the difference between government revenue and non-financial spending — captures only part of what the government is doing to boost aggregate demand.

That has become especially relevant, he said, after the government created several credit lines to implement public policies while operating under tight budget constraints.

In his view, Mefa’s main contribution is not the indicator itself, but the proposal for a new analytical framework in which fiscal policy is assessed along two dimensions at the same time: fiscal sustainability, measured by the primary balance, and its macroeconomic impulse.

“The primary balance tells you how the public accounts are doing. Mefa tells you what kind of impulse the government is transmitting to the economy,” Manoel told Valor. “The result is relevant because it reveals a sharp acceleration in fiscal expansion through channels that are not fully captured by the primary balance.”

In the second quarter, the Mefa impulse was driven by financial spending, which reached 3.29% of GDP. That pushed the indicator to its highest level in a decade.

Compared with the second quarter of 2022, the primary balance deteriorated by 1.82 percentage points of GDP, while Mefa increased by 5.27 percentage points.

“The fiscal expansion is much larger,” Manoel said. “That helps us understand why GDP is still growing at 2% despite high interest rates and why the NTN-B [inflation-linked Treasury bond] is yielding more than 8% in real terms, yet the market does not want it.”

With economic activity remaining resilient, investors expect higher inflation and therefore tighter monetary policy, which affects the yield curve. The Selic benchmark interest rate currently stands at 14.25%.

Market visibility

“It is an important indicator because not everyone in the market has the ability to dig into the details of the public accounts,” said Marcos Mendes, an associate researcher at Insper. “So when someone provides that service by creating an indicator that is easy to track, it helps democratize the information.”

Mendes himself occasionally tracks budget resources released through financial channels for lending purposes. His figures also point to strong growth: from 0.64% of GDP in 2022 to 1.45% this year.

He highlighted developments that often receive little attention from analysts. The government, for instance, has been changing legislation governing some public funds so that their current cash flow can be used for lending.

That is the case with the National Civil Aviation Fund, known as Fnac, and the Social Fund, whose scope was expanded to include the Minha Casa, Minha Vida housing program. As a result, Mendes said, it is misleading to view these credit lines as temporary measures financed solely by accumulated fund surpluses.

Wider fiscal lens

“We need to broaden the analysis of the public sector well beyond the basic framework that has been used for a long time — the primary balance and government bond debt,” said Bráulio Borges, an associate researcher at the Brazilian Institute of Economics at Getulio Vargas Foundation, known as FGV Ibre.

As previously reported by Valor, Borges and Manoel Pires, also of FGV Ibre, have proposed an even broader measure that would incorporate the federal government’s net worth into assessments of fiscal sustainability.

“It means stopping looking only at the primary balance and government bond debt and starting to look at all government assets and liabilities, including actuarial liabilities such as Social Security,” Borges said.

Mefa, which has been under discussion for about five months, has also sparked a public debate between Manoel and Borges on FGV Ibre’s blog.

Interest-rate debate

Manoel argues that unpaid budget obligations, credit operations, weaker fiscal-policy controls and higher primary spending have added 2 percentage points to Brazil’s structural interest rate — the rate consistent with the economy growing at its maximum sustainable pace without accelerating inflation.

He also says Mefa indicates that Brazil’s fiscal position is now worse than in 2022, the final year of Jair Bolsonaro’s presidency.

Borges, however, points to higher interest rates in the United States as another factor behind Brazil’s increase.

“Since 2022, international interest rates have also risen by two percentage points,” he said. “International rates are, in a way, the floor for what Brazil has to pay.”

To assess perceptions of Brazil’s public finances, Borges looks at the spread between long-term Brazilian and U.S. interest rates as a gauge of how bondholders are pricing risk. By that measure, he said, the current assessment is similar to 2022.

Despite their differences, Borges also believes the government’s current strategy of implementing public policy through credit is misguided.

“If the idea is for fiscal policy to help stabilize the economic cycle, it should be contractionary and work in coordination with monetary policy, but that is not happening,” he said. “Part of the reason is that there is a political and electoral cycle in the middle. Unfortunately — and we see this in many countries around the world — governments turn on every possible tap during elections, in part because it is becoming increasingly difficult for incumbents to win reelection.”

The result, Borges said, is a higher interest rate, which in turn worsens the outlook for debt sustainability.

Valor contacted the Finance Ministry for comment but did not receive a response.

By Lu Aiko Otta — Brasília

Source: Valor International

https://valorinternational.globo.com/

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Private consumption drives Brazil’s post-pandemic growth, IMF says

The Fund points to a strong labor market, income gains and credit as key factors behind household spending exceeding forecasts

 

 

 

 

The recovery in private consumption has been the main force sustaining Brazil’s economic expansion since the pandemic, the International Monetary Fund said in a report on the country released Thursday (23).

With the labor market remaining strong, incomes rising sharply and credit expanding at a robust pace, private consumption has repeatedly exceeded projections made by the Fund staff at the start of each year since 2021.

Private consumption accounts for roughly 60% of Brazil’s GDP on the demand side. In the first quarter of this year, household spending rose 1% from the previous quarter, again supported by a tight labor market, credit growth and income-transfer programs, all factors highlighted by the IMF.

Consumption strength

The report said private consumption has played a larger role in the recovery than other components of demand, including investment. Although investment has also expanded, it remains below its pre-pandemic trajectory.

Net exports, meanwhile, have contributed more to real GDP than before the pandemic, supported by strong exports, particularly hydrocarbons. Imports, however, remain below their pre-pandemic path, which the IMF said partly reflects the incomplete recovery in investment.

The Fund also pointed to continued fiscal support as another factor behind Brazil’s rebound from the pandemic, noting that government consumption has repeatedly exceeded expectations.

In addition, “total primary public spending, including transfers, exceeded forecasts, reflecting higher spending by states and municipalities, partly financed by transfers from the federal government,” the IMF said.

Fiscal support

The Fund said higher government spending was partly offset by stronger public revenue, driven by both economic growth and tax-policy measures.

“Overall, staff assess that fiscal support since the pandemic, through its immediate and lagged effects, added around 2% to the level of real GDP by 2025. This support contributed to output exceeding potential, implying a procyclical impulse,” the report said.

The IMF also said the growing number of exceptions to Brazil’s fiscal rules has weakened the path for the primary balance that would otherwise be consistent with meeting the targets.

Explaining the fiscal framework that replaced the spending cap in 2023, the Fund noted that Congress approved increases in government spending in 2025 that can be excluded when assessing compliance with primary-balance targets. The permitted deductions could reach as much as 0.7% of GDP by 2027.

“Some of the permitted deductions are not related to unexpected events,” the report said.

The IMF said the increase in deductions has pushed the trajectory of primary balances further away from the targets established under the fiscal framework and raised the projected path of long-term public debt.By

*Por Rafael Vazquez – São Paulo
Source: Valor International
https://valorinternational.globo.com/
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Brazil extends gasoline subsidy as oil prices climb

Government will keep a R$0.44-per-liter gasoline subsidy in place for another 30 days following renewed tensions in the Middle East

 

 

 

 

Finance Minister Dario Durigan confirmed that Brazil’s government has decided to extend the R$0.44-per-liter gasoline subsidy. The measure was introduced on May 25 but was originally scheduled to remain in effect for only two months, meaning it would expire on Saturday (25).

“We will not let the Brazilian people pay more for fuel. We will continue providing this support,” Durigan said when asked about the measure during an interview with BandNews on Thursday (23) evening.

In a statement, the Finance Ministry said the ordinance extending the gasoline subsidy was signed by the minister on Thursday and will be published in Friday’s (24) edition of Brazil’s Official Federal Gazette. The subsidy will remain at R$0.44 per liter for another 30 days, effective from July 26.

The extension was prompted by the recent surge in Brent crude prices on international markets. The economic team had initially planned to phase out the gasoline subsidy in July after the United States and Iran reached an agreement aimed at ending the conflict in the Middle East. The announcement had driven Brent prices down to around $70 per barrel, close to pre-war levels.

The agreement, however, was not implemented, and tensions in the Middle East escalated again. At Thursday’s close, Brent crude rose 7.04% to $100.69 per barrel. As a result, the government decided to maintain the gasoline subsidy for another 30 days.

A separate subsidy of R$1.12 per liter for diesel also remains in effect. The Finance Ministry said that measure was extended for an additional 60 days on July 16.

*By Jéssica Sant’Ana — Brasília

Source: Valoar International

https://valorinternational.globo.com/

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Carrefour returns to growth in Brazil, improves profitability in Q2

CEO Alexandre Bompard says commercial strategies and cost-cutting initiatives drove sales growth

 

 

Carrefour delivered resilient results in Brazil during the second quarter, marked by a return to sales growth and continued improvement in profitability. The retailer’s performance in the Brazilian market came despite a still-challenging macroeconomic environment, where high interest rates continue to weigh on consumers’ purchasing power and keep retail sector sales volumes in negative territory.

“Our commercial strategies and cost-cutting initiatives enabled us to grow sales and improve margins during the second quarter,” Carrefour CEO Alexandre Bompard said in a statement.

The French retailer generated €5.46 billion in sales in Brazil during the quarter, up 9% from a year earlier. On a comparable basis, excluding currency effects, revenue increased 0.4%, reversing the 0.8% decline recorded in the first quarter.

Atacadão, Carrefour’s cash-and-carry chain in Brazil, returned to growth, posting a 0.5% increase in comparable sales and outperforming the country’s cash-and-carry market as a whole. The company said sales volumes have stabilized since the beginning of the quarter.

In its conventional retail segment, comparable sales declined 0.6%, mainly reflecting the company’s deliberate slowdown in e-commerce sales of non-food products.

To strengthen commercial momentum in Brazil, Carrefour invested in targeted marketing campaigns and expanded its product portfolio, with particular emphasis on its Bulnez private-label brand, which now includes 200 products.

The company’s financial services division also delivered strong results in the second quarter, with its loan portfolio expanding 13% while revenue rose 8%.

Carrefour’s recurring operating income in Brazil reached €359 million in the first half of the year, up 5.8% from the same period in 2025. The recurring operating margin improved by 9 basis points to 4%, supported by cost optimization measures and operational efficiency initiatives.

On a consolidated basis, Carrefour reported a net profit of €54 million for the first six months of the year, reversing a €361 million loss recorded a year earlier. Sales totaled €39.4 billion, an increase of 1.7% year over year.

The company reaffirmed its full-year guidance, including expectations for higher operating margins, increased free cash flow generation and growth in earnings per share, supported by anticipated improvements in operating performance during the second half of the year.

*By Felipe Laurence, Valor — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Fiscal watchdog flags risk from state-owned companies’ financial situation

Possible issues include Treasury contributions, debt payments, increased subsidies to dependent companies, and reduced dividends, IFI says

 

 

 

The deteriorating financial condition of some federally owned state-owned companies is heightening fiscal risks for the federal government, according to the Independent Fiscal Institution (IFI), the public finances watchdog linked to the Senate. Those risks include possible capital injections from the National Treasury, higher subsidies for Treasury-dependent state-owned companies, and payments on loans the companies took out under federal guarantees but failed to honor. There is also a risk of lower dividends being paid out to the federal government.

The warning appears in the July Fiscal Monitoring Report (RAF), released Thursday (23). The chapter on state-owned companies was written by director Alexandre Andrade and staff member Gustavo Queiroz. Among the companies showing financial deterioration are Correios, Emgepron, and Infraero.

Correios, for instance, posted negative operating cash flow of R$692 million in 2025, following a R$2.4 billion deficit the year before. Infraero recorded negative operating cash flow of R$375.4 million, a R$207.9 million deterioration from 2024. The indicator matters because it measures a company’s ability to generate resources through its core business.

Operating margin shows further signs of weakness. Correios closed 2025 with a negative operating margin of 42.9%, its worst level since the indicator began deteriorating in 2022. Emgepron also stayed in negative territory, at negative 24.8%, followed by Infraero at negative 10.5%.

Operating margin reflects a company’s ability to service its financial debt and invest in its own growth. A negative margin leaves a state-owned company with limited capacity to fund its investment plans or even sustain operations, raising the likelihood of eroding shareholders’ equity or needing capital injections from the National Treasury.

The report also flags companies that lean more heavily on financial income than on operating revenue, like Emgepron, ABGF, Infraero, Codern, and Emgea, all show a high ratio of financial income to net revenue, a warning sign for the federal government.

According to the IFI, this pattern can point to a shortage of investment projects, low operating efficiency, or reliance on funds from earlier federal capital injections.

The report also shows the primary balance of federal state-owned companies steadily deteriorating. After posting a surplus equal to 0.06% of gross domestic product (GDP) in 2022, the group ran deficits of 0.02% of GDP in 2023, 0.07% in 2024, and 0.04% in 2025. On a rolling 12-month basis through May of this year, the deficit reached 0.07% of GDP.

Treasury dependence

 

In the institution’s assessment, the worsening fiscal and financial conditions at some companies raise the risk that Treasury-dependent state-owned companies will need supplementary budget allocations or capital injections, adding pressure to the federal government’s primary spending.

For companies that are not Treasury-dependent, the main risk lies in weaker cash generation and lower dividend payments to the federal government, along with the possible need for future recapitalizations.

Another risk identified is that state-owned companies may fail to repay loans backed by federal guarantees. In such cases, the National Treasury has to cover the debt, adding further pressure on public finances.

The IFI notes that the deterioration among state-owned companies is neither uniform nor driven by a single cause but says the data reveal patterns that warrant government attention.

Among Treasury-dependent state-owned companies, an analysis of shareholders’ equity, operating cash flow, and the cash adequacy indicator identifies another group with concerning financial conditions: Codevasf, CBTU, Embrapa, HCPA, and EBSERH.

“For these companies, it’s important to stress that the issue isn’t solvency in the traditional sense, since their existence depends on Treasury subsidies rather than their own cash generation. The real risk lies in the persistent mismatch between spending and transfers, which tends to translate into pressure for supplementary budget allocations or extraordinary capital injections, competing for fiscal space with other public policies,” the IFI explained.

 

Among state-owned companies that are not Treasury-dependent, operating margin, exposure to financial income, and earnings-quality indicators point to where the biggest problems lie. Correios, Emgepron, and Infraero show that, even without directly burdening the federal budget, these companies may see their ability to pay dividends impaired or need capital injections—such as the one the federal government plans to provide Correios in 2027.

*By Jéssica Sant’Ana — Brasília

Source: Valor International

https://valorinternational.globo.com/

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U.S. adds 12.5% tariff on Brazilian goods over labor practices

New levy may push tariffs on many exports to 37.5%, while about 2,000 products remain exempt

 

 

In another protectionist move, the United States announced Thursday (23) an additional 12.5% tariff on Brazilian goods, arguing that the country has failed to address forced-labor practices in its supply chains. The measure applies to a total of 60 countries and takes effect this Friday.

For Brazilian products already subject to the 25% tariff imposed under the Section 301 investigation, the new 12.5% levy will come on top of the existing duty. The 25% tariff was announced by the Office of the U.S. Trade Representative (USTR) on July 15 and took effect on July 22.

The Brazilian government expects the two rates to be cumulative, bringing the total tariff to 37.5%. Amcham Brasil, the American Chamber of Commerce in Brazil, estimates that a large share of Brazilian products will be subject to the combined rate.

Sector impact

Development, Industry, Trade and Services Minister Márcio Elias Rosa said at a press conference after the announcement that several Brazilian industries would face the combined tariffs. They include footwear, machinery and equipment, parts and components, apparel and non-pharmaceutical chemicals.

About 2,000 products exported to the U.S., including beef, coffee, orange juice and fruit, remain exempt from both tariffs. A complete list of goods subject to the two levies, however, has yet to be released.

Washington based its decision on the claim that Brazil purchases goods from countries that fail to uphold adequate labor standards. Those products can therefore enter Brazil at lower prices, creating what the U.S. government considers unfair competition with American producers.

Five products were cited in Brazil’s case: aluminum, cotton, electronics, lithium batteries and tobacco.

Brazil and 53 other countries will face the 12.5% rate. Canada, Ecuador, the European Union, Indonesia, Mexico and Pakistan were assigned a lower 10% tariff. The U.S. government said the lower rate applies to countries that have taken steps to combat forced labor.

The USTR said a broad range of products would be exempt globally, including oil and gas, fertilizers, some food products and goods already covered by Section 232 national-security tariffs, such as automobiles, steel, aluminum and copper.

Products that comply with the United States-Mexico-Canada Agreement will also be exempt because of the highly integrated North American supply chain and the significant level of U.S. content in those goods.

Brazilian response

President Luiz Inácio Lula da Silva’s government criticized the new 12.5% tariff, accusing the U.S. of manipulating the issue without a legal basis “to sustain its protectionist trade policy.”

“The Brazilian government rejects the U.S. government’s decision to impose 12.5% tariffs on Brazilian products as a result of the Section 301 investigation concerning import prohibitions related to forced labor,” the presidential communications office, Secom, said in a statement released Thursday night.

“In the absence of a domestic legal basis to support its protectionist trade policy, the USTR chose to manipulate an issue that is fundamental to human rights and to the struggle of workers around the world in order to accuse 59 countries and the European Union of unfair practices,” the statement added.

Lula’s government also renewed its criticism of the tariffs as “completely arbitrary and unjustified.” It said it would immediately begin the procedures needed to activate mechanisms under Brazil’s Reciprocity Law, approved by Congress, and would bring the dispute before the World Trade Organization’s international dispute-settlement mechanism.

Negotiation strategy

Despite the government’s public stance, officials view the prospect of invoking the Reciprocity Law as remote. The Lula administration is still assessing the potential consequences of using the legislation. For now, Lula has instructed the government to remain at the negotiating table with the U.S.

Finance Minister Dario Durigan also rejected the additional tariff on Brazil. He said that despite the U.S. measures and the conflict in the Middle East, Brazil’s economic situation remains under control.

With an eye on this year’s elections, General Secretariat Minister Guilherme Boulos adopted a sharper political tone. He said the election would pit Lula against Bolsonaro’s political movement and Trump’s “colonialist ambitions.”

Boulos said the U.S. president was seeking Brazil’s surrender through the tariffs. “The Brazilian people’s response to those who want to subjugate us and to their ever-ready traitors will come at the ballot box,” he wrote on social media.

*By Sofia Aguiar, Jéssica Sant’Ana and Mariana Andrade — Brasília

Source: Valor International

https://valorinternational.globo.com/

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Chinese quota could slash Brazilian beef exports by R$4.5bn

Trade group Abiec projects 900,000 tonnes this year, 748,000 tonnes below 2025’s quota-free total

 

 

 

Brazil’s meatpacking industry expects to export roughly 900,000 tonnes of beef to China in 2026, down 748,000 tonnes from last year’s record, according to Roberto Perosa, president of the Brazilian Association of Meat Exporting Industries (Abiec).

That volume represents barely half of the 1.68 million tonnes of fresh beef China purchased in 2025, and the shortfall could cost Brazilian meatpackers as much as $4.5 billion in revenue. Companies have already moved to cut costs and scale back production.

The decline stems from China’s new safeguard measure, which caps Brazilian beef imports at 1.1 million tonnes for 2026. Because Beijing counts cargoes shipped in 2025 but cleared through customs this year, Brazil’s actual 2026 exports will fall short of the authorized ceiling. Through June, 794,600 tonnes had already reached Chinese ports.

Abiec now puts the revenue hit at $4.5 billion, based on the 748,000 tonnes of lost volume valued at the average price of shipments to China between January and June—$6,100 per tonne. At the start of the year, the industry had projected a smaller decline of 600,000 tonnes and $3 billion in lost revenue, using 2025’s average price of $5,000 per tonne—an estimate that did not yet account for the carryover of 2025 cargoes toward this year’s quota.

Brazilian processors have already halted production of certain cuts and suspended shipments to China starting in July, on the assumption that the quota has been exhausted. Chinese authorities have not yet confirmed the official figures.

Industry expectations are that slaughter lines dedicated to the Chinese market will resume in the fourth quarter, allowing exports to restart in mid-November. Given the roughly 40-day sea voyage, those cargoes would arrive in China in 2027, counting toward next year’s quota and avoiding the additional tariff.

“Everyone knows how exposed we are to the Chinese market. We’re learning to live with this new reality,” Perosa said at a press conference Thursday (16). “It’s a significant drop [to 900,000 tonnes]. It will show up in our numbers, weigh on the trade balance and reduce Brazil’s overall export volumes. We expect sales to other markets to pick up, but not enough to offset what we’re losing in China.”

 

Sales to China surged in the first half of the year as exporters rushed to ship under the 12% tariff before the quota closed, seeking to avoid a steeper 55% surcharge. The resulting competition for supply pushed prices higher, though it remains unclear whether that pace and those price levels could have held through the second half of the year.

Perosa said the industry will need to work to keep the drop in export volumes from deepening further. Overall, Abiec expects exports to end 2026 down 10% from 2025, when Brazil shipped 3.5 million tonnes. “We’re working to hold that line, but the challenges are real,” he said.

The fallout is already visible across the sector. Perosa said all Abiec member companies—which account for 98% of Brazil’s beef exports—have taken steps to adapt to the halt in sales to their top customer, including collective furloughs, layoffs, shortened shifts, reduced slaughter volumes and other measures. Many are currently operating at a loss.

“We’re having to make more adjustments on the production side than on distribution, but it varies by company. All of them are struggling, from the largest down to the medium-sized and small players,” he said. Perosa added that the squeeze could accelerate industry consolidation, with larger players moving to acquire smaller ones.

Beyond the exhausted China quota, Perosa said there is a “strong possibility” that exports to the European Union will be suspended starting in September, as Brazil has yet to provide sufficient technical evidence that cattle destined for the EU market are raised without antimicrobials—a setback that would further dent exporters’ revenue.

“It’s a high-value market that takes cuts with no outlet in Asia, and it’s an important part of our product mix. Exports there help ease pressure on domestic price formation,” Perosa said, adding that access to the European market also bolsters the “reputation” of Brazilian beef. “When the EU takes a position, it affects every other market,” he noted.

With both China and the EU curtailing demand, global appetite for Brazilian beef is set to shrink. Reduced competition for the product is expected to weigh on export prices, though Abiec has yet to finalize a forecast. Between January and June, Brazil exported 1.7 million tonnes of beef—up 15.5%—generating $9.8 billion in revenue, a 36.2% increase over the first half of 2025. Average prices climbed nearly 18%, to $5,700 per tonne.

Perosa said the drag on export revenue will eventually filter through to the domestic market, potentially pushing up beef prices for Brazilian consumers over the medium term.

“Prices in the domestic market may ease at first, but costs haven’t come down. Production is likely to fall, and as supply tightens, prices will rise again—that’s the rebound effect we’re seeing,” he said.

“If we kept producing the same volume as last year under current market conditions, prices would collapse. But with nowhere for that production to go, there’s no reason for the industry to keep producing at that level for export.”

*By Rafael Walendorff, Globo Rural — Brasília

Source: Valoar International

https://valorinternational.globo.com/

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U.S. tariffs hit $11bn in exports, deepen Brazil trade slump

About 3,000 products face additional levies of up to 37.5% as bilateral flows have already fallen 13% this year

 

 

New U.S. tariffs will leave Brazil facing some of the toughest restrictions on access to the American market, affecting about 3,000 products and more than $11 billion in industrial and agricultural exports, said the American Chamber of Commerce in Brazil, known as Amcham Brasil.

The U.S. surcharge on Brazilian exports could now reach 37.5%, the chamber estimates.

Amcham also warned that the tariff increase could deepen the contraction in bilateral trade, which has already fallen 13% this year, while weighing on investment flows between the two countries.

The new 25% tariff takes effect next Wednesday (22), and stems from an investigation conducted under Section 301 of the U.S. Trade Act. The provision allows Washington to impose sanctions on countries it considers to be acting against U.S. interests.

In Brazil’s case, the U.S. government claims that Pix, the country’s instant-payment system, harms American payment companies and that Brazilian authorities tolerate corruption. Washington has also criticized Supreme Court rulings involving U.S. technology companies.

Sector impact

Economists and foreign-trade specialists do not expect the latest tariffs to have a significant impact on Brazil’s economy as a whole. The consequences for individual industries, however, could be substantial, forcing companies to adapt and diversify their markets.

Experts have also urged the Brazilian government to respond cautiously because of the dispute’s political dimensions.

Manufacturers, whose exports to the U.S. were already declining sharply, are bracing for an even more difficult environment. Concern is particularly acute among industries whose products had previously been exempt but will now face tariffs, including dissolving pulp.

Paper, wood panels, medium-density fiberboard, particleboard and laminate flooring will also be affected.

Several major industries escaped the new levies, largely after their U.S. customers persuaded the administration that tariffs would be damaging. Exemptions were granted for pig iron and agricultural products including coffee, orange juice, beef, honey and seafood.

The U.S. government’s decision reflects the importance of those Brazilian goods to domestic supplies. Tariffs could have increased costs and added to inflationary pressure for American consumers.

Government response

Vice President Geraldo Alckmin said Brazil would invoke its Reciprocity Law “at the appropriate time” and provide support to the affected industries.

During the Section 301 investigation, the U.S. government sought the complete opening of Brazil’s chemicals market, Industry, Trade and Services Minister Márcio Elias Rosa said. Washington also requested the elimination of tariffs on industrial goods and access to Brazil’s automotive market.

The U.S. additionally sought an agreement restricting investments in critical minerals and rare earths by “non-market-oriented actors” and “foreign entities.”

“We obviously and clearly rejected any demand that could put at risk or violate the national interest, as is the case with Pix, or that could cause serious damage or losses to Brazilian industry,” Elias Rosa said.

The Brazilian government presented its “negotiable and non-negotiable” positions at every meeting with U.S. officials, the minister added.

Alckmin and Elias Rosa spoke at a press conference also attended by Foreign Minister Mauro Vieira, Finance Minister Dario Durigan, Environment Minister João Paulo Capobianco, Central Bank Chair Gabriel Galipolo and National Justice Secretary Maria Rosa Loula.

Diplomatic clash

Vieira pushed back against remarks by U.S. Secretary of State Marco Rubio targeting President Luiz Inácio Lula da Silva.

Rubio blamed the tariffs on the Brazilian government’s conduct toward the United States. In a post on X, he said Lula had “put his own ego ahead of making a deal for the welfare of the Brazilian people, and these tariffs are the price for that.”

Vieira said Rubio had attacked “the head of state of a friendly country in a crude and arrogant manner.”

He argued that what troubled the U.S. government was Brazil’s refusal “to bow” to “excessive ambitions and unreasonable demands” during the Section 301 investigation.

By publicly endorsing President Donald Trump’s decision, Rubio signaled that the White House intends to pursue a maximum-pressure strategy. The aim is to force the Brazilian government to make concessions on fiscal, environmental, digital and intellectual-property issues before the U.S. market is reopened more broadly to Brazilian exports.

Election politics

The U.S. decision has also become ammunition for Brazil’s leading presidential hopefuls.

President Lula’s Workers’ Party stepped up its attacks on Senator Flávio Bolsonaro of Rio de Janeiro, the Liberal Party’s likely presidential candidate. Party members used the term “TariFlávio” on social media in an effort to associate the new tariffs with the Bolsonaro family.

Flávio Bolsonaro, meanwhile, sought to portray the announcement as the result of inaction by the Brazilian government. He called Lula the “Brazilian Biden,” referring to former U.S. President Joe Biden.

Other prospective candidates, including Romeu Zema of the New Party, Ronaldo Caiado of the Social Democratic Party and Renan Santos of the Mission Party, sought to blame both Lula and Flávio Bolsonaro for the dispute.

*By Valor — Brasília, São Paulo, Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/

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