Redirecting exports is slow and difficult, experts say

Looking to other Asian markets beyond China could offer opportunities for some sectors

 

 

 

 

08/01/2025 

Opening new markets to redirect Brazilian products affected by the 50% U.S. tariff is a slow and challenging process that won’t bear fruit in the short term, warn international trade experts. Some sectors may eventually find opportunities in Asian countries outside of China, currently the largest buyer of Brazilian goods.

The process of opening new markets can take months or even years, experts explain. Bureaucratic hurdles, including sanitary licenses and regulatory approvals, must be overcome, and companies still need time to establish business contracts in these new destinations. This is all unfolding amid global turbulence, with the U.S. tariffs affecting several countries at once and spurring everyone to seek alternative markets.

Estimates on how much of Brazil’s export portfolio is subject to the new tariff vary. According to the Ministry of Development, Industry, Trade and Services (Mdic), the measure could affect 35.9% of Brazil’s exports to the U.S. In 2024, those exports totaled $40.3 billion, meaning around $14.5 billion are at risk due to the tariff imposed by President Donald Trump’s administration.

Welber Barral, former foreign trade secretary and partner at BMJ Consultoria, divides the affected products into three groups. The first includes food commodities like coffee and meat. Due to their characteristics, these have a better chance of being redirected to other global markets or even within the U.S. itself—but at the cost of lower prices, as the tariff effectively reduces American and global demand while supply remains unchanged.

The second group includes industrial products, particularly machinery. For these, the natural destination is Latin America, especially South America.

“China, Indonesia, and India are large markets, but they don’t have the same purchasing power as the U.S. Also, they’re more likely to buy commodities, since Brazil can’t compete in industrial products in those markets—except for niche items,” says Mr. Barral.

The third group consists of Brazilian subsidiaries of American companies. Their outlook is the worst, in Mr. Barral’s view. “Most likely, parent companies will seek factories in countries with lower tariffs to produce. Any investment plans in Brazil are now in limbo because companies no longer know to what extent they’ll be able to export to their own headquarters.”

Global demand conditions and supply in other regions also affect the search for new buyers, notes José Alfredo Graça Lima, vice president of the board at the Brazilian Center for International Relations (Cebri).

Coffee, for example, is largely exported to the U.S., but demand elsewhere in the world is already saturated, he says. “If we can’t find a market to replace the U.S., prices will be affected,” he warns.

Lia Valls, head of economic analysis at UERJ and associate researcher at FGV Ibre, emphasizes that entering new markets requires meeting specific quality standards, which can be a lengthy process.

“These adaptations are not impossible, but they won’t happen right away and won’t be feasible for every product,” she says. “Each market has its own quality certifications—Europe, for example, has very strict rules depending on the product.”

Machines and shoes face particular challenges, says Ms. Valls. “Some machines are custom-built for individual companies, and shoes are made to specific sizes. These products will require more significant adjustments to be suitable for new markets.”

Given the situation, expanding the list of exemptions to the U.S. tariff may be the best-case scenario, says José Augusto de Castro, CEO of the Brazilian Foreign Trade Association (AEB). “Personally, I think that list will expand. For some products, it simply doesn’t make sense to be excluded,” he says, citing coffee as an example—since it isn’t produced in the U.S.

In the short term, betting on countries that already buy from Brazil may be the safest move, says Mirella Hirakawa, head of research at Buysidebrazil. “The question is whether there will be demand to absorb this surplus.”

In the case of beef, 10.3% of Brazilian exports in the first half of 2025 were destined for the U.S. Some of that volume could be redirected to China, which accounted for 51.6% of Brazil’s beef exports.

Other products could follow the same path, says Ms. Hirakawa, including coffee—the European Union buys around 33.8% of Brazil’s coffee exports, compared to 16% by the U.S.—and ethanol. In that case, China and South Korea each import more than double what the U.S. buys (11.8%).

Carlos Frederico Coelho, researcher at the BRICS Policy Center and professor of international trade at PUC-Rio’s Institute of International Relations, believes Brazil can look to other Asian countries beyond China.

“It’s hard not to consider Asia. The continent may be the next frontier for protein exports. The challenge is, how much more can Brazil sell, given that we already export to the region? It will mean going beyond China,” he says.

In the case of coffee, global demand could help redirect exports over the medium to long term, Mr. Coelho explains. “The Brazilian coffee that won’t go to the U.S. will be replaced there by other suppliers. That opens up space elsewhere for Brazilian exports.”

Brazilian footwear, which was also hit by the 50% U.S. export surcharge, can’t easily be redirected to new markets due to its highly customized production, says Haroldo Ferreira, CEO of the Brazilian Footwear Industry Association (Abicalçados).

“I can’t take that shoe and ship it to Chile or Europe, for example. It was developed for a specific importer,” he explains.

According to Mr. Ferreira, 22% of Brazilian footwear exports go to the U.S. “Last year, we exported $216 million—10.3 million pairs. In the first half of 2025, we exported 5.8 million pairs, up 13.5%. In other markets, growth was 8.8% over the same period.”

For the textile sector, redirection is also costly due to the need for international infrastructure, such as distribution centers, sales networks, and local contacts, says Fernando Valente Pimentel, executive director of the Brazilian Textile and Apparel Industry Association (Abit).

“It’s not a matter of just switching markets. You can’t find new destinations right away,” he says. “The viable option is the local market, which has its own specific demand.”

Mr. Pimentel says the U.S. is one of the top three destinations for the industry’s exports. “We expected to sell around R$500 million this year, half of which had already been fulfilled in the first half,” he notes. “But with the new tariff, almost everything is jeopardized.”

In the search for new alternatives, Mr. Pimentel says the conclusion of the EU-Mercosur agreement is currently the sector’s top priority. “The deal could open new space for trade, investment, acquisitions, and operational and technological partnerships,” he says.

*By Marcelo Osakabe, Alex Jorge Braga and Michel Esquer — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Exporters propose emergency measures against Trump tariffs

Proposals call for tax rebates, credit lines as Lula administration distances plan from Bolsonaro-era model

08/01/2025

Brazilian exporters hit by the tariff hike imposed by U.S. President Donald Trump have submitted proposals for the federal government’s emergency support package, with the expectation that the aid will remain in place at least through much of next year. Companies involved said the contingency plan should last a minimum of six months, with the possibility of a six-month extension, and may include financing lines from the Brazilian Development Bank (BNDES).

While ministries leading negotiations with the U.S. have not committed to a specific duration, companies were told that support measures could be rolled out in phases—short, medium, and long term—allowing for an assessment of their impact. Two sources said that although many of the suggestions resemble elements of the COVID-19 relief plan from Jair Bolsonaro administration, the current government insists the initiative is different.

“They don’t want comparisons between the two, and argue that these are different measures for different times. But part of our proposals is based on that previous plan simply because it was tested and worked. Let’s say it’s a ‘mini menu’ from the pandemic playbook. And there’s no political element on our side,” said one industry executive involved in the talks.

Executives also said the 694 product exemptions announced by the U.S. on Wednesday (30) will not alter the framework already designed by the Finance and Development ministries. “That was the response we received when we raised the issue with government officials,” said one source.

The proposals aim to minimize reliance on direct funding from the federal budget, given Brazil’s tight fiscal situation, and to prioritize support for companies in the most critical condition, a criterion that industry groups admit leaves room for interpretation.

 

Smaller companies support

One key concern is support for smaller companies with limited financial capacity. Another involves distinguishing between companies that will halt exports immediately and those that will continue shipping to the U.S. despite losses due to lack of alternatives.

Some companies, for instance, produce goods in Brazil specifically tailored to the U.S. market and cannot easily redirect them elsewhere.

Among the proposals is a special line of credit to cover the Advance on Foreign Exchange Contract (ACC), in which banks provide exporters with upfront payment in foreign currency. The proposed measure would create a special dollar-denominated loan program through Brazil’s official financial system, including BNDES, to support transactions that fall through.

“This would be a special credit line for companies stuck with unsold goods, using international market rates and no subsidies. It would help those who produced and even invoiced, but didn’t ship,” said a leader in the textile sector. Another source noted that the proposal includes administrative costs and avoids drawing on federal funds.

Another request sent to the Finance and Development ministries involves raising the minimum Reintegra rate—Brazil’s Special Regime for the Reinstatement of Tax Amounts for Exporting Companies—from 0.1% to 3% for medium-sized businesses. This measure would apply to companies that continue exporting to the U.S.

Associations are also asking the government to extend the 3% rate to larger companies, but it’s unclear whether this proposal has gained traction in Brasília.

This would match the rate recently approved for individual microentrepreneurs, microbusinesses, and small enterprises, as published in the Official Gazette on Tuesday (29).

Another long-standing demand resurfacing is the acceleration of ICMS (state value-added tax) refunds owed to exporters, a request coming from sectors such as meat, wood, textiles, and fruit.

Industry associations are drafting a letter to state governments, backed by companies exporting to the U.S., to address ICMS credit reimbursements. The government of São Paulo has already pledged R$1 billion in ICMS refunds to help mitigate the tariff impact.

Wage cuts

One common theme among industry proposals is the possibility of reducing working hours and wages, with partial government subsidies, similar to the model adopted during the COVID-19 crisis. However, sources said the Finance Ministry is resistant to this idea due to its cost.

Under that previous scheme, companies paid part of employees’ wages, while the government covered the remainder.

 

One new idea is implementing a four-day workweek, with the fifth day counted as a “banked hour” to lower output. These labor-related proposals reportedly came from the National Confederation of Industry (CNI).

“It’s unfortunate we might need this, but it would be for a short period and limited to a few sectors. We believe it will be smaller in scope than during COVID, since this is an emergency situation,” said an executive who attended a July meeting with the Ministry of Development.

As of Thursday (31), representatives from the coffee, meat, wood, textile, and footwear sectors had already submitted proposals during meetings between ministries and industry leaders. But other affected sectors—subject to the 50% tariff hike—can also present suggestions.

Products such as coffee, fruit, meat, and manufactured goods are subject to an additional 40% tariff, on top of the existing 10%.

On Thursday, Vice President and Development Minister Geraldo Alckmin said the government’s action plan is “practically ready,” but still under review since the tariff details were released only a day earlier. He said President Lula will make the final decision, and the plan will involve financial, credit, and tax-related measures.

Hardest-hit sectors

While fewer sectors were hit by the new 50% tariff—around 700 products were exempt and kept at 10%—industries with significant economic and political weight in Brasília, like agribusiness, were included and spoke with Valor over the past few days.

These affected sectors account for 36% of Brazil’s exports to the U.S. by value, the Ministry of Development said after updating its figures based on the exemption list.

 

The main challenge is that few of these goods can be redirected to other international markets in the short term, due to limited storage capacity abroad and potential downward pressure on global prices. This is the case for meat, fish, and fruit, which are already feeling the impact.

Before orange juice was included in the exemption list, European buyers tried renegotiating contracts, offering $1,000 per tonne, even though the average price between January and June was $2,600.

Redirecting goods to the domestic market could also depress prices, revenues, and profit margins. This applies not just to perishables, but also to sectors like textiles, footwear, and furniture.

Furniture exported to the U.S. from Brazil, for instance, is designed specifically for American consumers, said the Brazilian Furniture Manufacturers Association (ABIMÓVEL). With this context in mind, industries are pushing for the government to finalize the plan quickly.

The Ministry of Finance declined to comment. The Development Ministry, led by Mr. Alckmin, said through its press office: “Since the U.S. government announced the imposition of tariffs on Brazilian exports, the federal government has met with representatives from all productive sectors, gathering assessments and proposals. The government is deepening its dialogue to define measures that protect jobs and support companies. The MDIC will organize meetings with the most affected sectors.”

The Presidential Communications Secretariat did not respond by press time.

Jéssica Sant’Ana, Lu Aiko Otta, Sofia Aguiar, and Renan Truffi contributed reporting from Brasília.

By Adriana Mattos  and Fernanda Guimarães  — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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The Magnitsky Act: Scope, Applications, and Repercussions for Brazilian Citizens.

 

The Magnitsky Act: Scope, Applications, and Repercussions for Brazilian Citizens.

By Alberto Murray

 

 

 

  1. Concept and Origin.

The Magnitsky Act is legislation originally enacted by the United States in 2012 in response to the death of Russian lawyer Sergei Magnitsky. He had exposed a corruption scheme involving Russian authorities and died in state custody under suspicious circumstances. The law was created to sanction individuals involved in serious human rights violations and transnational corruption. Over time, its scope was expanded through the Global Magnitsky Human Rights Accountability Act (2016), allowing the U.S. to apply sanctions to any foreign person or entity involved in such conduct, regardless of nationality.

  1. Sanctions Provided

Sanctions under the Magnitsky Act primarily include:

  • Freezing of assets in the United States;
  • Ban on entry into U.S. territory;
  • Prohibition on transactions with U.S. individuals and companies.

These sanctions are administrative and unilateral in nature and do not depend on prior judicial conviction in the sanctioned person’s country of origin.

  1. International Expansion

Other countries and blocs have adopted similar legislation, such as:

  • Canada (Justice for Victims of Corrupt Foreign Officials Act, 2017);
  • United Kingdom (Sanctions and Anti-Money Laundering Act, 2018);
  • European Union (Global Magnitsky Sanctions Regulation, 2020);
  • Australia and Estonia, among others.
  1. Targeted Individuals and Countries

Since its enactment, the Magnitsky Act has been applied to hundreds of individuals and entities from various countries, including:

  • Officials from Russia, China, Venezuela, Myanmar, Saudi Arabia, Iran, and North Korea;
  • Businesspeople, security forces personnel, intelligence agents, and political leaders involved in:

(a) Torture, extrajudicial executions, forced disappearances;
(b) Systemic corruption, such as embezzlement of public funds and bribery.

Notable examples include:

  • Saudi officials involved in the assassination of journalist Jamal Khashoggi;
  • Myanmar generals implicated in the repression of the Rohingya people;
  • Venezuelan officials tied to political repression and civil rights violations.
  1. Impact on Brazilian Citizens

Technically, a Brazilian citizen may be sanctioned under the Magnitsky Act if deemed by U.S. authorities (or those of other countries with similar laws) to be responsible for serious human rights violations or internationally significant corruption.

Possible consequences include:

  • Freezing of assets held in U.S. bank accounts;
  • Inability to travel to or conduct business with entities in the U.S.;
  • Inclusion on international sanctions lists, with banking and diplomatic implications.

However, there is no direct civil or criminal effect in Brazil unless Brazilian authorities decide to cooperate judicially or administratively with the sanction, which depends on sovereign discretion and often on international agreements.

  1. Legal Limitations

Application of the Magnitsky Act to Brazilian nationals respects Brazilian sovereignty: it has no direct extraterritorial effect on civil or political rights within Brazil. Nevertheless, its practical effects can be far-reaching internationally, especially in financial operations, global reputation, and international mobility of the sanctioned individual.

  1. Practical Effects of the Magnitsky Act on a Sanctioned Brazilian Citizen

Although the Magnitsky Act is an extraterritorial, administrative, and unilateral sanction (with no legal force in Brazil), its practical effects can be extensive, particularly when involving U.S. companies or those operating with U.S.-based technology and infrastructure. Key impacts include:

7.1. Digital Services and Technology Platforms

If a Brazilian individual is sanctioned under the Magnitsky Act, U.S. companies are legally required to immediately terminate any direct or indirect commercial relationship with that person. This may include:

Suspension or blocking of accounts with services such as:

  • Google (Gmail, YouTube, Google Drive)
  • Apple (iCloud, App Store)
  • Meta (Facebook, Instagram, WhatsApp)
  • Amazon (product purchases and Prime Video access)
  • Microsoft (Outlook, OneDrive, Teams, Xbox Live)
  • Netflix, Spotify, and other U.S.-based streaming platforms

These companies, even when operating in Brazil, follow the laws of their home country and block accounts linked to sanctioned individuals based on name, taxpayer ID (CPF), email, IP address, credit card information, physical address, and other associated data.

7.2. Use of Apps and Digital Stores

  • Block downloading or updating apps via Google Play or Apple App Store;
  • Restrictions on digital payment services such as Google Pay, Apple Pay, and PayPal.

7.3. Credit Cards and Financial Operations

Automatic cancellation of credit or debit cards issued by institutions operating under U.S. networks, such as:

  • Visa
  • Mastercard
  • American Express
  • Elo (in some cases, due to partnerships with international issuers)

This results from legal requirements prohibiting these companies from transacting with sanctioned individuals.

Restrictions also apply to the use of digital currency platforms or banks with U.S. correspondents, including cryptocurrency exchanges operating with dollars through U.S. institutions.

7.4. Banks and Brokerages in Brazil

Although the sanction does not compel Brazilian institutions to act, many avoid relationships with sanctioned individuals to prevent retaliation from the international financial system (such as losing access to U.S. dollar clearing or being subject to secondary investigations). As a result, the sanctioned person may:

  • Have bank accounts closed due to internal compliance procedures;
  • Be blocked from purchasing foreign currency (even for travel or business);
  • Be prevented from making international transfers, especially in U.S. dollars.

7.5. Reputational and Commercial Barriers

Brazilian companies operating with the U.S. or relying on U.S. technology may refuse to contract with or maintain relationships with the sanctioned individual out of fear of secondary sanctions (the so-called “chilling effect”).

This includes law firms, auditing firms, multinationals, e-commerce platforms, international shipping companies, insurers, travel agencies, and more.

7.6. Diplomatic and Mobility Restrictions

A sanctioned Brazilian citizen will not be able to obtain a U.S. visa or even make a flight connection in U.S. territory.

There may also be difficulties obtaining visas for U.S.-allied countries such as the United Kingdom, Canada, Australia, and members of the European Union, especially if they recognize or adopt similar measures.

  1. Final Considerations

Although the Magnitsky Act does not have binding legal force in Brazil, it can materially affect Brazilian citizens when involving companies or financial flows with direct or indirect connections to the United States. In practice, this can result in digital, financial, commercial, and even social exclusion — even without any legal proceedings in Brazil.

The impact is amplified by the global interdependence of payment systems, technology, and communication, all of which are heavily anchored in U.S. infrastructure.

July 2025

 

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Hydropower auction in Brazil faces delay over legal concerns

Energy regulator questions legality of ministry rule on concession terms in R$1.1bn auction to resolve hydropower shortfall debts

07/30/2025

Just two days before the auction meant to resolve Brazil’s hydrological risk (GSF) impasse, the process faces new uncertainty. Scheduled for August 1 and organized by the Electric Energy Trading Chamber (CCEE), the auction was called into question after Fernando Mosna, a director at the National Electric Energy Agency (ANEEL), said a Ministry of Mines and Energy (MME) ordinance regulating the mechanism is illegal.

The criticism, raised during ANEEL’s board meeting on July 29, led Mr. Mosna to request a review of the case, halting its analysis indefinitely. He argued that the ministry’s ordinance oversteps legal boundaries by setting parameters that contradict provisional presidential decree (MP) No. 1,300/2025, the legal basis for the auction.

At the center of the dispute is the difference between the Weighted Average Cost of Capital (WACC) established by the MP and the rate adopted in the ministry’s ordinance.

The MP 1,300 requires that compensation calculations follow ANEEL’s guidelines for concession extensions, as defined in Normative Resolution No. 1,035/2022, which sets the WACC at 9.63% per year. But Ordinance No. 112 sets a 10.94% annual rate in Article 7.

A higher WACC implies longer concession extensions, which Mr. Mosna said creates an economic distortion favoring generation companies and directly harming consumers, since power generation assets belong to the federal government.

“This ordinance is illegal, this concession extension based on a WACC of 10.94% is illegal,” he said. “I understand there’s an auction scheduled, but since the provisional decree is valid until September 17, I believe there’s still time to ensure the auction is carried out properly, legally, and rigorously. This call for bids should be suspended, maybe held on August 15 or September 1, still within the MP’s validity period, but with legal certainty and predictability to avoid the worst.”

It is up to the CCEE and MME to decide whether to postpone the auction. The CCEE did not respond to requests for comment. The MME, in turn, said the ordinance aligns with MP 1,300, was subject to public consultation, complies with legal criteria, and is backed by both technical and legal analysis.

“The MP aims to resolve and unlock up to R$1.1 billion in unpaid liabilities in the Short-Term Market, an issue pending for more than ten years,” the ministry said. “The MME highlights the importance of liquidity in the energy market to ensure investment and the sector’s sustainability while preventing further litigation.”

Financial bottlenecks

The auction seeks to solve one of the energy sector’s major financial bottlenecks. Under the plan, affected generators would purchase government bonds and, in return, receive concessions extensions (limited to seven years) as compensation.

Market players such as Engie, Abrage, Statkraft, and Abragel had already contacted ANEEL requesting clarification on the auction rules. Their concerns included the length of the extensions, the legal framework for energy sales during the extended term, and whether quota plants could freely allocate energy.

Mr. Mosna is expected to send a formal inquiry to the MME on these issues. The case’s rapporteur, director Agnes da Costa, submitted a vote addressing some concerns. She proposed allowing continued tariff discounts during the extended period and clarified that the extension would not alter the quota regime defined in existing concession contracts.

Ms. Costa also noted, citing a legal opinion from ANEEL’s Federal Attorney’s Office, that the seven-year limit applies only to extensions granted through the auction and does not affect any additional extensions provided by other laws or regulations.

In response to Mr. Mosna’s concerns, she suggested adding a recommendation to her vote that the MME reconsider its WACC decision and, if necessary, temporarily suspend the auction. While the proposal was well received by other board members, it did not satisfy Mr. Mosna, who pushed for a stronger recommendation urging immediate suspension. With no consensus, he exercised his right to review the case, putting the process on hold.

*By Marlla Sabino and Robson Rodrigues  — Brasília and São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Brazilian coffee may be spared U.S. tariffs under new trade deals

Commerce Secretary Howard Lutnick also mentioned pineapple, cocoa, and mango as products that could qualify for exemption

 

 

07/30/2025

U.S. Commerce Secretary Howard Lutnick said on Tuesday (29) that imports of non‑U.S. grown goods, such as coffee and cocoa, could be exempted from tariffs in new trade agreements. He explained that the administration is evaluating such exemptions, which could benefit exporting countries like Brazil, although he did not specify which nations might qualify.

In an interview on CNBC’s Squawk Box, Mr. Lutnick said: “If you grow something and we don’t grow it, that can come in for zero, so if we do a deal with a country that grows mangos, pineapple, then they can come in without a tariff, because coffee and cocoa will be other examples of natural resources.”

Of the four products mentioned by the U.S. official—coffee, cocoa, mango, and pineapple—coffee could offer Brazil the greatest advantage. The country was the top coffee supplier to the U.S. last year. Of the $6.3 billion imported by Americans, 30% came from Brazil. Colombia ranked second with a 21% share, and Guatemala third with 7%.

For Brazil, the U.S. remained the top destination for Brazilian coffee in 2024, with $1.9 billion in sales, ahead of Germany ($1.8 billion) and Belgium ($1.1 billion). Americans have never spent so much on Brazilian unroasted coffee as in 2024, but the 17% share of Brazil’s total coffee exports was the second lowest in the past ten years, above only the 15% seen in 2023.

Coffee was the third most exported Brazilian product to the U.S. last year, trailing only petroleum ($5.8 billion) and semi-manufactured non-alloy iron or steel products ($2.8 billion).

According to a source in the coffee export industry, there is still a great deal of uncertainty. And while Mr. Lutnick’s remarks were an important signal for the sector, a potential exemption might not apply automatically to all countries or products and could also depend on bilateral negotiations.

Another product where Brazil plays a relevant role in sales to the U.S. is mango, which accounts for about 12% of American imports—making Brazil the fourth-largest supplier—although with much smaller trade values. Brazilian data shows the country exported $46 million in mangoes to the U.S. last year, ranking 101st in overall exports to the American market.

Brazil did not rank among the top 25 suppliers of cocoa beans or fresh pineapple to the U.S. last year.

Mr. Lutnick said all tariffs will be finalized by Friday, the deadline set by President Donald Trump for countries to reach trade agreements with the U.S.

On Monday, the U.S. president said that countries that have not received letters from the White House would be subject to a universal tariff of 15% to 20%. Mr. Lutnick reinforced that message on Tuesday: “But for the rest of the world, we’re going to have things done by Friday. August 1 is the date that we’re setting all these rates.”

The Brazilian government was notified by the White House on July 9 that it would face a 50% tariff: the highest rate announced in any of the letters sent by Mr. Trump. In the letter, the U.S. cited alleged “unfair trade practices” by Brazil and a supposed “witch hunt” against former President Jair Bolsonaro, who is on trial before the Supreme Federal Court for attempting a coup d’état.

The tone of Mr. Trump’s communication surprised Brazilian officials. Diplomatic officials noted that the president explicitly mixed political issues involving Mr. Bolsonaro with technical matters of bilateral trade—a move considered unprecedented in the 200-year history of relations between the two countries.

Last week, Mr. Trump said some countries received 50% tariffs because they had not “gotten along well” with the U.S. government. He did not mention Brazil by name, but it was the only country among the 25 letters sent by the Republican leader that received the 50% rate.

Commenting on ongoing negotiations with other countries, Mr. Lutnick said U.S. and European Union officials are still discussing tariffs on steel, aluminum, and digital services, continuing talks aimed at advancing the agreement announced Sunday by Mr. Trump and European Commission President Ursula von der Leyen.

Reporting by Isadora Camargo in São Paulo, with Reuters.

By Valor — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Vale Q2 profit expected to drop 41% on weaker iron ore prices

Revenue and EBITDA also seen lower as volumes and prices decline

 

 

07/29/2025 

Vale is expected to report weaker results in the second quarter, due to lower iron ore prices during the period. According to projections from five firms consulted by Valor—Citi, Itaú BBA, BTG Pactual, Goldman Sachs, and Ativa Investimentos—the mining company’s net income, revenue, and EBITDA should all fall short of the results posted between April and June of 2024. Vale is scheduled to release its earnings after markets close on Thursday (31).

The company’s revenue is projected to reach approximately $8.8 billion, down 11.1% from the same period last year. Net income is expected to average $1.6 billion, a drop of 40.7%. EBITDA is forecast to fall 18.9%, to $3.1 billion.

Ativa noted that even though Vale posted higher-than-expected production in the second quarter, weaker prices disappointed expectations.

Itaú BBA said the quarter was marked by rising inventories and a focus on mid-grade products.

Production and sales data released by Vale on July 22 showed that total sales of iron ore fines, pellets, and run of mine (ROM), a type of raw ore, reached 77.35 million tonnes in the second quarter, a 3.1% year-over-year decline.

Sales of iron ore fines alone totaled 67.68 million tonnes, 1.2% lower than the same period in 2024. Pellet sales dropped 15.6% year over year to 7.48 million tonnes.

Vale attributed the lower iron ore sales to its strategy of optimizing its product portfolio, with a concentration of shipments to China, leading to longer delivery times. Stock rebuilding after first-quarter production and shipping constraints also contributed to the lower sales.

The lower volumes came alongside weaker realized prices. The average price for Vale’s iron ore fines in the second quarter was $85.10 per tonne, down 13.3% from a year earlier. Pellet prices averaged $134.10 per tonne, a 14.7% decrease. In both cases, the declines reflected falling international benchmarks.

BTG Pactual said the Q2 production and sales figures reinforce Vale’s message that market conditions for high-grade ores remain weak. “While we believe Vale’s focus on product mix is the right call in a volatile market, it also highlights how unfavorable conditions remain for higher-quality ores,” the bank said.

Goldman Sachs pointed to lower iron ore prices and a stronger Brazilian real as potential risks going forward, both of which negatively affect Vale’s profit. Still, the bank viewed the mining giant’s strategic positioning favorably: “The reality, not just for Vale, is that mining quality is declining and the market is not rewarding it. So it makes sense to conserve iron molecules to extend output or reserve higher-quality ore for when prices justify it.”

Citi noted that Vale’s iron ore output reached 151.2 million tonnes in the first half, putting the company on track to meet its 2025 guidance of 325 million to 355 million tonnes.

* By Kariny Leal, Valor — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/

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Telefónica’s Vivo considers new acquisitions to expand fiber footprint

Acquisition of full control of FiBrasil increases flexibility for new deals, CEO says

 

 

 

07/29/2025 

Telefônica Brasil’s recently announced acquisition of full control of FiBrasil aims to expand its fiber broadband reach to 30.1 million homes passed, CEO Christian Gebara told Valor, adding that the company is eyeing further acquisitions in the segment. Telefônica, which operates under the Vivo brand, posted net income of R$1.3 billion in the second quarter, according to results released Monday night (28).

“We’re still looking [at opportunities], but it’s clear we need to grow our network given the fiber potential in Brazil,” Mr. Gebara said. FiBrasil currently has 4.6 million homes passed with fixed broadband coverage. Including FiBrasil’s infrastructure, Vivo now reaches 30.1 million homes.

Telefônica estimates that Brazil’s addressable fiber broadband market comprises roughly 60 million homes, based on commercial viability. Founded in 2021, FiBrasil was originally a 50/50 joint venture with Canadian fund CDPQ. Telefônica paid R$850 million to acquire CDPQ’s stake, increasing its ownership to 75%. The remaining 25% remains with Telefónica Infra, a subsidiary of the Spanish parent company.

FiBrasil was designed as a neutral fiber network—open to all operators—but the model failed to gain traction in Brazil.

“This whole neutral fiber network model, with multiple clients, didn’t take off. Not just FiBrasil, but the market as a whole saw little demand from third parties beyond the anchor tenant, which in this case was Vivo,” Mr. Gebara acknowledged.

With full control of FiBrasil, Telefônica expects greater operational flexibility and access to synergies. “It’s time for us to take a more active role in managing this asset. We see opportunities for synergy and increasing network penetration,” he said. “FiBrasil’s current customer penetration rate is about 16%, while ours [Vivo’s] is over 24%.”

In the second quarter, Telefônica Brasil reported net earnings of R$1.3 billion, up 10% from the same period in 2024. Total revenue rose 7.1% to R$14.6 billion, driven by growth in postpaid mobile services (up 10.9% to R$8.2 billion) and fiber broadband (up 10.4% to R$1.9 billion), outpacing inflation, as calculated by the Extended Consumer Price Index (IPCA).

Earnings before interest, taxes, depreciation, and amortization (EBITDA) totaled R$5.9 billion in the quarter, up 8.8%, with a margin of 40.5%—compared to 39.9% a year earlier.

Total costs excluding depreciation and amortization reached R$8.7 billion, up 5.9% year-over-year, mainly due to increased commercial activity.

Cost increases were partly offset by operational efficiencies and higher use of digital channels, such as PIX instant payments, which accounted for 44% of total collections.

Digital services and new business lines accounted for 11.2% of Telefônica’s trailing 12-month revenue as of June, up from 9.5% a year earlier—reflecting efforts to diversify revenue streams. “If we look at absolute values, B2C digital services—which account for three percentage points of the 11.2%—grew by 14.8%,” said Mr. Gebara. Meanwhile, corporate services grew by 31.3% year-over-year.

The operator ended June with a customer base of 116.2 million accesses, a 1.3% increase from the prior year. Postpaid subscriptions continued to grow, up 7% to 68.5 million lines.

When asked about a potential sale of Telefônica Brasil shares by the Spanish parent—a possibility raised by Spanish newspaper El Economista—Mr. Gebara said he did not know any such move.

“What I can say is that Telefônica Brasil remains a core asset for the group, along with Spain, Germany, and the UK. Brazil is a key contributor to the group’s performance in terms of both growth and cash generation. In 2024, we accounted for 23% of group revenue—even with the depreciation of the real—and 32% of the group’s EBITDA and operating cash flow,” he noted.

In late June, El Economista reported that the Spanish parent company was considering two options to finance acquisitions in Spain and elsewhere in Europe without increasing debt: a capital raise or the sale of a 20% stake in its Brazilian operations. Telefónica S.A. currently holds 77.13% of Telefônica Brasil.

*By Rodrigo Carro — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Finep expands support for critical minerals projects

Brazilian Studies and Projects Financing Agency has contracted 171 strategic minerals projects totaling R$1.4bn since 2019

 

 

07/29/2025 

With the increased demand for credit for mining critical and strategic minerals in Brazil, a sector that has come under the U.S. scrutiny after the tariff hike announced by President Donald Trump, the Brazilian Studies and Projects Financing Agency (Finep) has expanded its funding for the sector and also plans to launch a public call to promote the use of these minerals in the energy transition.

Finep has signed 171 contracts involving strategic minerals totaling R$1.4 billion since 2019. Last year, support reached a record high, with R$659.8 million contracted for 41 projects financed through repayable credit using the TR (Reference Rate), which is lower than the benchmark interest rate (Selic), and with grants for companies as well as scientific and technological institutions.

The investments are targeted at two fronts: encouraging research and development to enable the exploration of these minerals and strengthening domestic mineral processing to increase added value to national products.

Brazil has abundant reserves of critical and strategic minerals. For example, Brazil holds the second-largest rare earth reserves in the world, behind only China. However, domestic production remains low, and much of the ore is exported raw, resulting in a product with low value added.

“Finep has invested heavily in the energy transition and in the essential role of critical minerals in enabling this transformation. These minerals are strategic for Brazil from a technological and geopolitical perspective. So, we are expanding support for the domestic processing of these minerals to advance the production chain with high value-added technologies and products,” said Finep president Luiz Elias.

Projections from the International Energy Agency (IEA) indicate that global demand for copper, lithium, nickel, cobalt, graphite, and rare earths are expected to grow by more than 80% by 2024. In Brazil, the increase in public investment is part of the reindustrialization policy of President Lula da Silva’s third term, called NIB, and the new national mining policy, which is in the final stages of development by the federal government.

In the first half of this year, Finep contracted ten projects focused on critical minerals, totaling R$83 million.

The tally does not include a R$5 billion public call launched in partnership with the Brazilian Development Bank (BNDES) in January. The call, which selected projects from national and international companies, such as WEG and Stellantis, as well as small-sized mining companies and startups, involves R$ 4 billion from BNDES and R$1 billion from Finep.

“We expect the projects included in this call to increase our support in 2025, bringing us closer to the amount contracted in 2024. For 2026, we expect an even higher amount,” said Newton Hamatsu, Finep’s superintendent of energy transition and infrastructure.

The high demand for the call with BNDES, which received 124 proposals for a total of R$85.2 billion in disbursements, led BNDES to launch another public call this year. The new call will allocate R$200 million to the implementation of energy transition projects using critical minerals.

“The joint call with BNDES showed the strength and diversity of our scientific and industrial base in this sector. To enable the total investments planned for the submitted projects, we plan to launch a new call this year to support high-risk technological projects,” explained Elias Ramos, Finep’s director of innovation.

Finep downplays the impact of trade negotiations with the U.S. on investments in Brazil but emphasizes the need to continue developing the sector. “It is natural for the United States to seek to expand partnerships with Brazil in this field. I do not believe, however, that the current trade sanctions will harm Brazilian investments,” said Mr. Hamatsu.

*By Paula Martini — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/

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SPX says election already part of market reality

Brazil interest-rate strategy chief Gabriel Hartung sees room for rate cuts amid signs of economic slowdown

 

 

07/28/2025 

Brazil’s domestic interest rate market still carries an excessive risk premium, despite mounting evidence of slowing economic activity and declining inflation—factors that support a more aggressive monetary easing cycle in 2026, according to Gabriel Hartung, head of Brazil rates at SPX Capital, in an interview with Valor Econômico. One threat to that outlook is the escalating trade conflict with the U.S. following Donald Trump’s new tariffs, at a time when the 2026 presidential election is already influencing market dynamics.

“Although we’re still a year and three months out from the election, the race is already shaping market behavior, and that influence will only grow,” Mr. Hartung says. His base case sees a tight contest but assigns higher odds to the opposition winning. “There’s still a lot that can happen, but based on what we’re seeing today, we think an opposition victory next year is more likely.”

This view stems, he says, from growing signs of structural unpopularity in President Luiz Inácio Lula da Silva’s administration, as well as the potential for the opposition to be led by well-rated governors from the South, Southeast, or Center-West regions. “It’s a competitive race on both sides, but there are clear signals that the opposition has a real shot.”

Electoral dynamics are already impacting asset pricing. Mr. Hartung notes that recent market deterioration coincided with a bump in Mr. Lula’s popularity. He believes the “election trade” will only intensify, and by the second half of 2026, markets may become almost entirely election-driven. “For now, investors are still focused on inflation, activity, and fiscal issues… And on that front, fiscal uncertainty is mounting due to the government’s expected response to Trump’s tariffs—what kind of support package it might roll out for affected companies.”

Depending on the scope of that support package, risk repricing may follow. “It’s a cause for concern,” Mr. Hartung says, warning it could complicate the Central Bank’s work if the aid proves large enough.

He adds that rising tensions between Brazil and the U.S. remain on his radar. “The tariff risk is what’s been driving recent volatility in the yield curve. Not so much because of the 50% hike itself, but because of fears of escalation. From a trade dispute, it could extend to financial flows,” Mr. Hartung warns, noting the U.S. is a crucial source of both direct and portfolio investment in Brazil.

“It’s the single largest source of FDI and also of portfolio flows into the country,” he says. “There’s an estimated stock of U.S. investment in Brazil worth close to 15% of GDP. If that flow is restricted, we’ll see significantly more market stress. That’s why people are getting nervous. When the Brazilian government criticizes the U.S., the market reacts badly. And when the U.S. hits back, the market suffers too.”

This fear, Mr. Hartung says, is contributing to a higher risk premium in the domestic yield curve, which has steepened recently due to a jump in long-term rates—now approaching 14%. “It’s unlikely we’ll actually see restrictions, because those would be extreme measures and rare for the U.S. But the risk is there, so the premium is too.”

SPX’s base case sees economic activity, already showing signs of slowing, weakening further by year-end—despite near-term noise from a large court-ordered payment of government debts (precatórios). “The trend is clear—we’re slowing down, and this is already evident in investment and consumption data. By the end of the year, it’ll likely be visible in the labor market too. If the Central Bank does nothing, the slowdown could become self-reinforcing.”

That’s where SPX sees room for interest rate cuts. “There’s space for yields to decline. Selic is at 15%—an unusually high level, even for Brazil. It’s hard to imagine we won’t see some easing next year. And based on current pricing, markets are still projecting only a modest rate-cut cycle,” Mr. Hartung says.

He reveals that SPX holds long positions in nominal rates (which gain when rates fall) and currently prefers the nominal curve over real rates extracted from inflation-linked NTN-Bs. Shorter maturities have already priced in a significant drop in “implied inflation,” but mid-curve inflation expectations remain elevated. “So, in a scenario of slower growth and falling inflation, we expect further compression in the belly of the curve. Real rates may fall, but not as much as nominal ones. That’s why we see nominal rates as more attractive right now.”

Mr. Hartung also notes a global trend of steepening yield curves, driven by sharply expansionary fiscal policies in developed economies. “Over time, governments compete for capital to finance their deficits. That usually pressures the long end of the curve,” he explains.

In the U.S., Mr. Hartung sees growing expectations that a future Trump administration would appoint a more dovish Federal Reserve chair. “If that happens, it would push the short end of the U.S. curve down but could lift long-term yields, reflecting greater inflation tolerance,” he says.

*By Gabriel Roca and Victor Rezende, Valor — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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