With U.S. tariffs rising, French chamber urges to back EU-Mercosur deal

French-Brazilian chamber says delay risks lost opportunities as global alliances shift

 

 

 

08/05/2025 

The U.S. decision to impose broad tariffs on global imports underscores the urgency for Brazil to strengthen its trade relations—starting with ratifying the long-pending European Union–Mercosur agreement, said Thierry Besse, president of the France-Brazil Chamber of Commerce in São Paulo (CCIFB-SP).

“Everything happening now only reinforces the urgent need to deepen economic integration between the European Union and Mercosur,” said Mr. Besse, a French-Brazilian who also serves as institutional director of Vinci Concessions, an airport and highway operator. The interview took place on July 30, just minutes after U.S. President Donald Trump signed a decree imposing 50% tariffs on Brazilian products and three days after the U.S. and EU reached a separate trade deal that set tariffs at 15% for most European exports.

“We urgently need to advance integration between these blocs—and especially, in our case, between France and Brazil—because there is predictability, trust, long-term vision, and partnership here,” Mr. Besse said.

A longtime advocate of the EU-Mercosur deal, Mr. Besse emphasized that the agreement would benefit both regions, particularly France–Brazil trade. “We hope for swift ratification, because time is passing and the need for this agreement is increasingly clear.”

The São Paulo regional office is one of four in Brazil under the France-Brazil Chamber of Commerce, and it represents more than 70% of the chamber’s 500 member companies. According to Mr. Besse, a strong majority supports the EU-Mercosur deal.

The agreement would create a market of over 750 million consumers—about 10% of the global population—and a combined GDP of around $22 trillion, or roughly 20% of global GDP.

However, France remains the biggest obstacle to ratification. That stance may shift, Mr. Besse noted, as French President Emmanuel Macron and other European leaders grow increasingly frustrated with the recent EU-U.S. trade pact.

“The world seems increasingly volatile and irrational. In this challenging environment for businesses, it’s clear that long-term partnerships and trusted relationships matter more than ever. The Chamber, which just celebrated its 125th anniversary, is a living testament to the strength of the France–Brazil relationship,” said Mr. Besse, without directly commenting on the U.S. decision.

“French investment in Brazil and bilateral trade have evolved largely independent of political cycles. French companies invest in Brazil with a long-term outlook, which is very healthy for economic relations between our countries.”

According to Mr. Besse, signs point to continued growth in the relationship. Despite Brazil’s economic volatility, French companies and investors have maintained their presence. Chamber data shows that 1,300 French subsidiaries currently operate in Brazil, employing over 500,000 people and generating more than €61 billion in revenue in 2024 (approximately R$390 billion).

“That’s double Vale’s 2024 revenue,” he said, referencing the Brazilian mining giant’s R$206 billion net revenue, “and almost the size of Petrobras’s,” which posted R$490.8 billion the same year. “It’s a very significant volume.”

Mr. Besse described the current phase of bilateral economic relations as highly positive, with Brazil becoming a “privileged destination” for French investment. “France is not focused on just one sector. French companies are present across the economy—from aerospace and defense to retail, infrastructure, energy, and luxury goods.”

According to Brazil’s central bank, France was the country’s third-largest foreign investor in 2023, with a stock of $66.3 billion—just behind Spain ($66.7 billion) and the United States ($272.8 billion). The Chamber added that Brazil is the second-largest emerging market for French investment, trailing only China.

Among the sectors where French investment is strongest, Mr. Besse highlighted energy transition. French companies have been building and financing solar plants—particularly in northeastern Brazil, but not exclusively—and are also active in wind energy.

Despite the already strong French presence, Mr. Besse sees room for growth—especially in trade. In 2024, trade between the two countries totaled $9.1 billion, which the Chamber still considers “modest.” President Lula has even called the figure “a shame,” given the size of both economies.

According to Mr. Besse, the EU-Mercosur deal could help unlock this potential—particularly for small and medium-sized enterprises (SMEs), which face the biggest barriers to entering foreign markets. “There is still great potential for increased exports by French companies to Brazil—and vice versa.”

Initially, he noted, the deal would facilitate exports by industrial-sector SMEs, thanks to the gradual reduction of tariffs between the blocs. Over time, it could lead to local investments and new production facilities, which would “generate jobs and income.”

*By Michael Esquer  — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Líder to represent flying car rival to Embraer’s Eve in Brazil

Executive aviation firm signs deal to acquire up to 53 aircraft from U.S. startup in a $240m agreement

 

 

 

08/05/2025 

Líder Aviação, one of Latin America’s largest executive aviation firms, has signed a strategic partnership with U.S.-based startup Beta Technologies to represent and operate its electric aircraft in Brazil, including both eVTOLs (electric vertical takeoff and landing vehicles, commonly known as “flying cars”) and eCTOLs (electric conventional takeoff and landing aircraft). The move positions Beta to compete directly with Eve, Embraer’s urban air mobility subsidiary.

CEO Júnia Hermont said the agreement grants Líder exclusive rights to sell Beta’s aircraft in Brazil, and also establishes the company as the authorized maintenance hub for Beta’s fleet in the country. As part of the deal, Líder signed a firm order for three aircraft, along with options for an additional 50 units. At list prices, the full order could total up to $240 million.

“We’ve spent over six years evaluating new types of aircraft for urban air mobility. We’ve reviewed many proposals, including from companies that failed to move forward. Two years ago, we deepened our analysis and hired a technical team to assess both performance and feasibility,” Ms. Hermont explained.

She emphasized that while the agreement represents a firm partnership with Beta, it does not exclude the possibility of adding other eVTOL models to Líder’s fleet in the future, including those developed by Eve. Líder currently represents HondaJet and also operates Embraer aircraft.

Unlike Beta, Eve does not work with third-party sales representatives in Brazil and manages all commercialization in-house. This gave Líder an opening to strike a deeper partnership with Beta.

Brazil is seen as a prime market for eVTOLs, given the country’s vast executive aviation fleet and its urban mobility infrastructure challenges. Brazil currently has the second-largest general aviation fleet in the world, behind only the United States, with over 10,000 aircraft in operation.

Beta’s entry into the Brazilian market through Líder marks its first official move into the home turf of Eve.

The startup is currently developing two aircraft: the CX300 (eCTOL), with a list price of approximately $3.75 million, and the ALIA 250 (eVTOL), priced at around $4.75 million. Both aircraft have similar designs and can seat up to five passengers plus a pilot.

Ms. Hermont highlighted the broader impact of electric aircraft technology: “The future is clean energy. The aviation sector has committed to net-zero carbon emissions by 2050. We must act now,” she said.

In May, Líder became the first executive aviation company in Brazil to complete a flight using sustainable aviation fuel, with a 10% SAF mix powering a helicopter. The fuel was purchased from Vibra, the first distributor to make SAF commercially available in Brazil, imported from Europe.

Beyond environmental gains, electric aircraft are expected to significantly reduce operating costs compared to combustion-engine aircraft.

While Líder is still studying the best model for operating electric aircraft in Brazil, the company envisions a range of use cases: airport-to-airport routes, urban and regional flights, air ambulance services, cargo delivery, and on-demand corporate travel. The new aircraft are seen as complementary to its existing fleet of helicopters and fixed-wing aircraft.

The CX300 has already undergone crewed test flights in New York, and Beta expects U.S. Federal Aviation Administration (FAA) certification by 2026. The ALIA 250 is projected to receive FAA approval in 2027. Given the strong cooperation between Brazil’s aviation authority, ANAC, and the FAA, Brazilian certification is expected to follow shortly thereafter.

Eve, for its part, also aims to certify its eVTOL in Brazil by 2027 and is working with the FAA to secure dual certification.

After a wave of investor enthusiasm in the eVTOL sector, which saw hundreds of startups emerge worldwide, the industry is entering a consolidation phase. Some ventures have collapsed or stalled, while others, like Eve and Beta, have reached more advanced development stages and secured substantial funding.

Separately from the Beta partnership, Líder is set to officially open its new hangar at Campo de Marte airport, in São Paulo, on Tuesday (5). The terminal is seen as a cornerstone of executive aviation’s strategy to absorb demand displaced from the Congonhas airport following the arrival of a new private concessionaire.

*By Cristian Favaro  — São Paulo

Surce: Valor International

https://valorinternational.globo.com/

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U.S. tariff hike hits 10,800 mid-sized exporters in Brazil

Textile and furniture companies without scale face growing risks of layoffs, revenue losses

 

 

 

08/05/2025

Of the 74,000 mid-sized companies currently operating in Brazil, around 10,800 (14.6%) export goods and are now exposed to the market upheaval triggered by the U.S. tariff hike, according to estimates from Fundação Dom Cabral (FDC). Roughly 80% of these exporters are part of the manufacturing sector—one of the segments hardest hit by the measures enacted by Donald Trump.

Professor Paulo Roberto Feldmann of the University of São Paulo’s School of Economics, Business Administration, Accounting and Actuarial Science (FEA-USP) sees three distinct scenarios among the sectors most vulnerable to the tariff shock. In agribusiness export chains—such as coffee, cocoa, meat, and fish—large, efficient groups can redirect shipments to Asia or Europe and, if needed, shift part of their output to the domestic market, helping stabilize prices. However, in sectors like textiles and furniture, which are dominated by mid-sized firms lacking scale or export consortia, the tariffs leave them cornered, with increasing risks of layoffs and revenue losses.

Machinery falls somewhere in between, according to Mr. Feldmann. Manufacturers of agricultural equipment benefit from strong domestic demand and advanced technology, while producers of industrial machinery are losing ground in a shrinking manufacturing base. Mr. Feldmann warns that without cost-cutting, regulatory streamlining, and support for export consortia, the tariff hike could accelerate Brazil’s deindustrialization and deter investment.

FDC professor Eduardo Menicucci modeled the impact of the tariff hike using a real case from Pará: an açaí producer that earns a third of its revenue from U.S. sales. “The increase in the final price for American consumers would be 36%, and that can’t be fully passed on by the importer,” he pointed out. “This creates a very narrow margin for maneuvering, especially with limited domestic demand and no capacity to store the entire output in cold storage.”

Some sectors may be able to build inventory, Mr. Menicucci noted, while others—like furniture—will likely be forced to shut down production lines for the export market. Nearly one-third of Brazil’s furniture and mattress exports and 40% of exports of furniture-related raw materials, inputs, and technology go to U.S. consumers, according to the Brazilian Furniture Industry Association (ABIMOVEL). Some companies are already seeing order cancellations, shipment suspensions, production cuts, and revenue losses tied directly to the Trump administration’s tariff hike.

One example is Móveis Serraltense, a furniture company based in São Bento do Sul, which granted two weeks of collective leave to its 140 employees in July. In 2024, 80% of the company’s production went to the United States; in the first half of 2025, that figure dropped to just 30%. “For the next three months, we’re projecting production idle time of 40% to 50%,” says CEO Daniel Lutz.

“We plan to retain all jobs, perhaps by reducing the workweek by one day without cutting wages, to save on electricity and inputs,” Mr. Lutz added. Serraltense is exploring new markets in Europe and Latin America, but the CEO warns that diversification will take time.

In the furniture hub of Arapongas, Paraná, leather upholstery manufacturers are also feeling the pressure. At Toro Bianco, a family-run business with 100 employees, scheduled shipments for August were canceled, said director Marcela Carandina.

In Nova Prata, Rio Grande do Sul, nearly all of Artemobili’s production is exported to the U.S. Due to a wave of order cancellations, the company put its 360 employees on paid furloughs. “This doesn’t just create uncertainty for our company, but for the entire community, where hundreds of families rely on the furniture sector to make a living,” said CEO Gabriel João Cherubini.

The Santa Catarina furniture cluster—the country’s largest exporter of furniture—is heavily dependent on U.S. clients. Its 398 companies, located in São Bento do Sul, Campo Alegre, and Rio Negrinho, employ around 7,000 people and generated $123.4 million in exports last year, representing 14% of Brazil’s total furniture exports. The U.S. accounted for 62% of that total ($77.1 million).

“The new tariffs erode the competitiveness of Brazilian furniture, undermining a bilateral trade relationship that our companies have built through efficiency, innovation, and sustainability,” said Luiz Carlos Pimentel, president of the São Bento do Sul Furniture Industry Association (Sindusmobil). He calls for the continuation and strengthening of bilateral trade negotiations and stresses the urgent need for measures to support Brazil’s export-oriented industries.

The tariff hike comes at a fragile time for mid-sized firms, as highlighted by early findings from FDC’s annual Market Radar study, shared in advance with Valor. Between 2021 and 2024, the number of mid-sized companies entering court-supervised reorganization more than doubled, from 197 to 416. The study, based on data from 10,400 mid-sized companies, shows that these firms saw a 10% drop in net income in 2024 compared to 2022.

“If the tariffs are not eased, some of these companies will be in very precarious situations, especially those that are already in debt,” Mr. Menicucci said. “For those that are already putting workers on paid furloughs, the next step will likely be layoffs, and I don’t know of any mid-sized firm with the financial reserves to handle that.”

Structural issues like lack of planning and limited access to capital continue to hamper mid-sized businesses in Brazil’s still-low-internationalization economy. An FDC study conducted in 2023 found that only 11% of mid-sized companies had management maturity levels considered excellent. “That points to a major gap, but also a huge opportunity,” said professor and researcher Diego Marconatto. He noted that just 13% of Brazil’s mid-sized companies have subsidiaries abroad, even though 85% operate under a B2B model.

The immediate impact of the tariff hike may be minimal for firms without an international presence, but over the medium term, ripple effects will likely hit suppliers to major exporters. “In footwear, for instance, the supply chain is very dynamic and competition is fierce, which means international competitors can quickly replace Brazilian products,” Mr. Marconatto said. “We’re likely to see layoffs in that and other sectors.”

*By Dauro Veras  — Florianópolis

Source: Valor International

https://valorinternational.globo.com/

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Brazil’s trade isolation exposed as tariffs reshape global markets

With few free trade deals, Brazil scrambles to boost competitiveness amid U.S. protectionism and shifting export routes

 

 

 

08/04/2025

Brazil’s limited network of free trade agreements is becoming a costly liability as President Donald Trump’s aggressive tariff policies force a reordering of global trade. As exporters around the world seek alternatives to the U.S. market, Brazilian products face higher duties than competitors from countries with robust trade pacts.

Currently, just 13% of Brazilian exports are covered by trade agreements, compared to 60% in most other countries, according to Lucas Ferraz, head of the Global Business Center at FGV EESP and former secretary of foreign trade. “When a country has few trade deals, its products lose competitiveness in foreign markets because they’re subject to tariffs that others aren’t,” he said. “The entire world is being hit by Trump’s tariff bullying, and that puts us in an even tougher spot.”

While expanding trade agreements is not a quick fix, it’s becoming increasingly necessary, said former development minister Armando Monteiro. “This fallout with the U.S. and the post-Trump trade landscape will force Brazil to broaden its network of agreements and improve access to multiple markets,” he said. “It won’t be easy to reroute exports in the short term, but this is a long-term imperative.”

Among the most significant deals on the table is the long-awaited Mercosur–European Union agreement, which would create a market of 750 million consumers and raise the share of Brazil’s trade under agreements to 30% from 13%. The agreement was finalized last year, and the government anticipates signing it by the end of 2025.

A new variable emerged last week when the U.S. struck a deal with the EU. “We need more time to assess how this will impact the Mercosur agreement,” said Mr. Ferraz. “Agricultural resistance may increase, but pressure from European industry could push for a faster internalization of the deal.” Mr. Monteiro sees this internal balance tipping slightly in favor of moving the deal forward.

Mexico, Canada, and EFTA among Brazil’s top trade targets

Mexico is another priority. Although both countries are members of the Latin American Integration Association (ALADI), Brazil and Mexico have limited bilateral agreements—three in total, two covering the automotive sector and one economic cooperation pact. Minister of Development, Industry, Trade and Services, Geraldo Alckmin, is planning a trip to Mexico later this month to explore ways to expand the relationship, which has long been on the diplomatic agenda.

The Trump tariff shock may also help advance the Mercosur–EU deal and other pending agreements, including with Canada, Singapore, and EFTA (Norway, Switzerland, Liechtenstein, and Iceland). Mr. Monteiro argued that Brazil should reconsider its commitment to negotiate only as part of Mercosur, a rule that has often hindered deal-making. Argentina’s new president, Javier Milei, has diverged from the bloc’s traditional positions, and Uruguay has long advocated for unilateral negotiations.

“If Brazil were no longer bound to Mercosur in trade talks, it could pursue agreements with countries also looking for new partners in light of the partial closure of the U.S. market,” Mr. Monteiro said. “Brazil needs to shift gears—use this moment of difficulty to reorient its trade policy and expand its bilateral agreements.”

Brazil’s advantages in such negotiations include the size of its domestic market and its diversified economy. The idea of ending the bloc-only negotiation clause has been debated for years, including during José Serra’s tenure as foreign minister under President Michel Temer. But under Workers’ Party governments, Mercosur has remained a pillar of Brazil’s foreign policy.

Mr. Monteiro believes today’s circumstances call for a more assertive stance. One of his chief concerns is the outcome of ongoing trade talks between the U.S. and China, which together account for 40% of Brazil’s exports. “If the Americans gain broader access to China’s food market, it would mean more competition for Brazil.”

Lack of trade deals also hinders investment and diversification

Mr. Ferraz warned that Brazil’s limited trade ties not only hurt exports but also deter foreign investment. “There’s growing evidence that countries with more trade agreements attract more investment—they’re better positioned to become export platforms to other key markets,” he said. “Those without access to major markets are left out of this new global chessboard, this reconfiguration of supply chains.”

He criticized Brazil’s historical reluctance to pursue trade deals, noting that the country’s engagement has fluctuated over time but never reached the level of urgency seen today.

Seeking new markets is now one of several measures Brazil is deploying in response to the 50% tariff hike Mr. Trump announced on July 30. Other steps mentioned by Mr. Alckmin and Finance Minister Fernando Haddad include a contingency plan to support affected companies, opening a negotiation channel with the Trump administration, and challenging the tariffs in U.S. courts and international forums.

Mr. Monteiro expects the contingency plan to follow the usual playbook: special credit lines, extensions on tax deadlines, and refinancing of export-related contracts (ACC). The government will likely require companies to retain jobs as a condition for support.

*By Lu Aiko Otta — Brasília

Source: Valor International

https://valorinternational.globo.com/

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Latin America becomes battleground for U.S. airlines

American Airlines and United invest in Azul as eyes turn to potential Gol deal

 

 

 

08/04/2025 

A potential joint investment by American Airlines and United Airlines in Azul’s Chapter 11 proceedings has drawn attention to the escalating rivalry between the two U.S. carriers for market share in Latin America, according to sources consulted by Valor.

Both airlines have committed to investing up to $300 million after Azul’s court-supervised reorganization in the United States.

Until recently, industry expectations were that strategic partners—chief among them Air France-KLM and especially American—would inject capital into Gol’s own Chapter 11 process. That did not materialize. However, sources say the door remains open: in 2027, a window is expected for strategic investors to acquire equity stakes in Gol.

According to people familiar with the discussions, the support from American Airlines and United for Azul is partly motivated by the possibility of a tie-up between Azul and Gol in the Brazilian market—a scenario disclosed by the companies’ shareholders in mid-January. If the deal moves forward, whichever U.S. carrier is left out could lose significant ground in Latin America.

“I see both of them joining Azul’s Chapter 11 as a way to neutralize each other. It’s a competitive move—if one acts, the other feels compelled to follow,” said one source close to the matter.

Delta, a key U.S. rival, already has a strong partnership with Latam via a joint venture formalized in 2020 and approved by regulators in the years that followed. Since the JV was implemented in October 2022, passenger traffic between Brazil and the U.S. on Delta and Latam rose from 797,000 in 2022 to 2 million in 2024, according to data from Brazil’s National Civil Aviation Agency (ANAC).

American Airlines invested $200 million in Gol in 2022, acquiring roughly 5% of the Brazilian carrier at the time (now diluted). The deal also gave American Airlines three years of exclusive codeshare rights for North-South America routes with Gol—a period that ended this past April.

United, a longstanding Azul partner and shareholder, had a similar exclusive codeshare agreement with Azul, which expired in February and was not renewed. At the same time, United also owns approximately 5% of Abra, the holding company that controls Gol and Colombian airline Avianca.

Speaking to reporters on July 24, Azul executives reiterated that the company is still negotiating the terms of its exit financing, a stage in which American and United could contribute up to $300 million. The investment is subject to conditions that have not yet been disclosed to the market.

News of the proposed investment in Azul initially confused financial circles, raising doubts about the future of American Airlines’ partnership with Gol. The uncertainty grew as the exclusivity period between the two carriers expired on April 25.

American Airlines later issued a public statement clarifying that its potential investment in Azul does not affect its partnership with Gol.

Gol currently handles 98% of American Airlines’ connecting traffic in Brazil—a level of service that Azul is unlikely to match, given Gol’s dominance at the Galeão and Guarulhos airports, both critical international hubs.

As Valor previously reported in January, Gol had been in talks with international partners to raise capital as part of its exit from Chapter 11. According to sources, negotiations were progressing, but amid market turbulence—including debates over airfares and heightened currency volatility—Gol opted to conclude its restructuring as quickly as possible.

Sources noted, however, that Gol has left the door open for a potential strategic investment in mid-2027, when the company aims to raise around $300 million through an equity offering. “The thinking was: better to get out now than to wait,” said one person familiar with the decision.

The same source added that Azul’s entry into Chapter 11 improved the chances of a future combination with Gol. “Abra’s team didn’t believe Azul’s restructuring, as it was originally being handled, would work. The Abra team is made up of bankers who know Chapter 11 well,” the source noted.

The fate of a potential merger still depends on Abra’s assessment of Azul’s reorganization exit plan, which is currently in development.

Azul expects to present the plan to creditors by mid-September.

On July 24, the company announced it had secured the release of approximately $1.1 billion from the second tranche of its debtor-in-possession (DIP) loan, a key component of its ongoing restructuring process in the U.S. Of that total, $200 million went to the company’s cash reserves and the remainder was used to pay down priority debt.

Abra, Gol, Azul, United, and American Airlines all declined to comment.

*By Cristian Favaro — São Paulo

Source: Valor International

https://valorinternational.globo.com/

 

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China builds deeper roots in Brazil amid global realignment

From energy and logistics to consumer goods and tech, Chinese firms expand their footprint as economic and geopolitical ties deepen

 

 

 

08/04/2025 

In the first half of 2025 alone, Brazil received $379 million in direct Chinese investment for equity stakes in local businesses, exceeding the country’s annual totals since 2018, according to Brazil’s central bank. These figures reflect capital inflows for the acquisition or expansion of company equity, excluding reinvested profits.

China ranked tenth among Brazil’s top sources of equity investment in the period—its highest position since the official records began in 2001. The U.S. led the ranking, but countries commonly used as Chinese investment vehicles, such as the Netherlands, Luxembourg, Panama, and the British Virgin Islands, also appeared ahead.

“Official numbers often understate the true volume of Chinese activity because the money rarely comes directly from China,” said Stephen O’Sullivan, a corporate and M&A lawyer at law firm Mattos Filho. “For instance, we worked on a transaction with a Chinese group, but the direct shareholder was based in the Netherlands.”

Mattos Filho recently advised a Chinese cement company in the acquisition of one of Brazil’s largest quarries and assisted the Chinese winner of a government oil auction in June. “We’ve never invested so heavily in the Chinese market, including visits to the country,” said Giovani Loss, a partner in the firm’s infrastructure and energy practice. “We see growing activity and are positioning ourselves to meet the demand.”

Infrastructure, logistics, and consumer markets attract Chinese capital

Chinese firms are now active across a broad range of sectors. Train manufacturer CRRC, for instance, plans to open a factory in Araraquara, São Paulo state, to fulfill contracts recently awarded by Brazilian public transport authorities. It signed a deal with São Paulo’s metro system to deliver 44 trains and, in partnership with the Comporte group, has secured public-private partnership (PPP) contracts in São Paulo and Minas Gerais.

Another major player is China Communications Construction Company (CCCC), seen as a likely bidder for the Santos-Guarujá tunnel auction scheduled for September. Sources say the group may participate through its Portuguese affiliate Mota Engil. Meanwhile, federal officials report that Chinese firms have expressed interest in railway concessions and port infrastructure, including the massive Tecon 10 terminal in Santos. One potential bidder is China Merchants Group.

Other ongoing Chinese investments include power transmission lines by State Grid—which secured a R$18 billion contract in late 2023—and a grain terminal at the port of Santos being developed by Chinese commodities trader Cofco.

A report published in July by the American Enterprise Institute (AEI) identified Brazil and Indonesia as the top destinations for Chinese investment in the first half of 2025. Derek Scissors, the report’s author, noted that Brazil has become a prime target for Chinese capital over the past two years.

Post-pandemic normalization and shifting investment patterns

“The pandemic disrupted Chinese investments globally. Even after China’s reopening in late 2022, 2023 remained uncertain. We consider 2024 a year of normalization,” said Fabiana D’Atri, an economist at Bradesco Asset Management (Bram) and director of economics at the Brazil-China Business Council (CEBC).

While the CEBC’s latest investment survey, covering data through 2023, hasn’t yet shown a surge in Chinese interest, Ms. D’Atri noted clear signs of growth based on press coverage, internal monitoring, and firsthand experience serving Chinese clients. According to Mr. Scissors, Brazil is the most attractive investment target among countries outside the wealthy world. While early investments focused on commodities like offshore energy, iron ore, and soybeans, recent trends show a large-scale shift toward energy infrastructure.

Now, Chinese firms are also targeting Brazil’s emerging middle class and its consumer markets. “Chinese companies are increasingly eyeing Brazilian consumers. Look at Shein, the flood of low-cost fashion, electric vehicles, televisions, air conditioners,” said O’Sullivan.

Ms. D’Atri noted that service-oriented sectors, less dependent on regulation, are drawing new investors. Meituan, a Chinese food delivery giant, has announced plans to enter the Brazilian market, and 99—owned by China’s Didi—is launching its delivery service in São Paulo. “While these investments may not be as large in volume as energy or infrastructure projects, they are more diffuse and demand complementary services,” she said.

The growing interest was also evident following President Lula’s May visit to China. Mixue, the world’s largest Chinese beverage chain, announced its intention to launch operations in Brazil. “This appears to mark a new wave of Chinese presence, expanding beyond energy and raw materials,” said Ms. D’Atri.

Brazil seen as reliable, but challenges remain

Ms. D’Atri highlighted that Brazil is not only a large consumer market but a “reliable partner” for China, thanks to strong bilateral trade. China has been Brazil’s top trading partner for over a decade. According to the federal export agency ApexBrasil, China accounted for 28% of Brazil’s exports in 2024. Between 2015 and 2025, China launched 163 greenfield investments in Brazil—projects built from scratch.

“The trade relationship supports and informs the investment relationship. Chinese investors now arrive with a much more detailed understanding of the Brazilian market,” said Ms. D’Atri. Bram recently launched two China-focused ETFs on Brazil’s stock exchange, and Ms. D’Atri expects that Chinese investors will soon be able to access Brazilian equities directly. “The complexity of the relationship is increasing,” she added.

Still, that sophistication comes with a dose of caution. Exchange rate volatility and high interest rates make Chinese investors more risk-averse compared to their experience at home, she said. “Brazil offers growth and opportunity, but financing operations here remains uncertain.”

Chinese investors are also calling for more infrastructure concessions and auctions. “This is one of Brazil’s homework items: building a larger project pipeline,” said Ms. D’Atri. The Shandong Hi-Speed Group is reportedly evaluating transportation initiatives, but São Paulo investment secretary Rafael Benini noted that such investments require time and adaptation. “Understanding Brazil’s rules—like environmental licensing and expropriation laws—is one of the biggest challenges. Taxation is also perceived as complex,” he said.

Mr. Benini still sees strong potential but acknowledges Chinese firms often take longer to make decisions. Some projects, such as the metro Line 6-Orange and the West-East Integration Railway (FIOL), ultimately moved forward without Chinese participation, contributing to a perception that Chinese investment signals are not always reliable.

Ms. D’Atri emphasized that investment decisions still rely heavily on Beijing’s guidance. “When the Chinese government promotes internationalization, the flow intensifies. Brazil’s voice is growing, but the money ultimately follows Beijing’s lead.”

Strategic alignment in a shifting geopolitical landscape

At present, both China and Brazil are well-positioned to strengthen their economic ties. Beyond trade and consumer appeal, Brazil holds the world’s second-largest reserves of rare earth elements—vital for green technology and clean energy. These resources have caught the attention of both China and the United States in recent trade negotiations.

Some experts believe Brazil could become a platform for Chinese firms to access restricted markets like the EU. “Chinese policy encourages companies to go global—but there aren’t many welcoming markets left,” said O’Sullivan. “Unlike the U.S., Germany, or Australia, Brazil is opening its doors. We need these investments.”

Rising tensions with the U.S. are also drawing Brazil and China closer, he argued. “As the U.S. becomes more hostile, China is looking to friendlier partners—and Brazil fits the bill. Once a few Chinese firms are established, others follow to support them. A full business ecosystem begins to form.”

Mr. Trump’s letter to Lula announcing a 50% tariff on Brazilian imports did not directly mention China, but analysts believe Brazil’s growing ties with Beijing were likely a factor. “Brazil’s engagement with China goes beyond economics,” said Deutsche Bank strategist Drausio Giacomelli and macro analyst Carlos Munoz-Carcamo. “Lula hosted this year’s BRICS summit and signaled possible entry into the Belt and Road Initiative.”

They also highlighted a recently formalized transcontinental railway linking the Atlantic and Pacific, backed by both nations.

Still, Mr. Scissors dismissed a causal link between the tariffs and China-Brazil relations. “It’s political arrogance, nothing more. Brazil and China are not interchangeable with the U.S. Any closer ties are politically understandable but economically irrelevant,” he said.

*By Anaïs Fernandes and Taís Hirata — São Paulo

Surce: Valor International

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NEWSLETTER – MURRAY ADVOGADOS JULY 2025

NEWSLETTER

MURRAY ADVOGADOS

JULY 2025

 

07/01/2025

BRAZIL WANTS TO INCLUDE CARS AND SUGAR IN MERCOSUR

The Lula administration aims to give strategic sectors preferential treatment during its presidency of the bloc

 

Brazil plans to use its upcoming six-month presidency of Mercosur to push for the inclusion of the automotive and sugar industries in the bloc’s common trade regime, according to the country’s Foreign Ministry, known as Itamaraty. The initiative is expected to be one of President Lula’s top priorities for the regional group in 2025.

 

The effort is tied to the economic significance of these sectors within intra-bloc trade. Roughly half of all trade between Brazil and Argentina, for example, is concentrated in the auto industry. Yet despite its central role, the sector has remained outside Mercosur’s common trade framework since the bloc was created 34 years ago.

 

“Our goal is to include the automotive sector in Mercosur, and we will continue working toward a regional agreement in this area,” said Ambassador Gisela Maria Figueiredo Padovan, secretary for Latin America and the Caribbean at Brazil’s Ministry of Foreign Affairs, who is leading the negotiations.

 

Ms. Padovan said the Brazilian government has already drafted a proposal outlining a new common industrial policy for the regional auto sector. “We’ve submitted a draft agreement aimed at establishing a shared industrial policy. Just between Brazil and Argentina, autos account for 50% of bilateral trade—that’s highly significant. We’re pursuing a deal that will be mutually beneficial,” she said.

 

Negotiations on the sugar industry are still at an earlier stage, with no formal text under discussion. Even so, talks are moving forward, according to Ambassador Francisco Pessanha Cannabrava, director of the Mercosur Department at Brazil’s foreign ministry.

 

“In the case of sugar, we’re aware of the sensitivities among our Mercosur partners, but our goal is not to harm local agriculture. Our focus is on aligning production chains. Countries like Uruguay and Paraguay have domestic industries that rely on sugar, so we need to find ways to integrate it into the bloc,” Mr. Cannabrava said.

 

As part of this process, Brazil is considering working with the Inter-American Development Bank (IDB) to help develop technical benchmarks for sugar sector integration. “We’re working on terms of reference to figure out how sugar can be included in Mercosur in a way that’s a win-win for everyone. These terms could be developed by respected institutions like the IDB,” he added.

 

Brazil’s Foreign Ministry also expressed optimism about reaching an agreement with Argentina on a new version of the Common External Tariff Exception List. The current discussion stems from a proposal made during Argentina’s previous Mercosur presidency, which secured exemptions for 50 new products.

 

According to Brazilian officials, a final agreement could be reached during the next Mercosur summit, scheduled for July 2–3 in Buenos Aires. The exception list allows member countries to apply different external tariffs to specific goods, giving them more flexibility within the bloc’s broader trade structure.

 

Source: Valor International

https://valorinternational.globo.com

 

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07/02/2025

 

DEVELOPMENT LENDERS TEST NEW FUNDING STRATEGY FOR AI, DATA CENTERS

BNDES and Finep sign agreement aiming to turn Rio into high-capacity data hub; exploring R$1bn AI investment fund

 

Brazil’s leading development institutions are ramping up efforts to attract artificial intelligence (AI) investments and boost the country’s data center infrastructure. On Tuesday (1), the Brazilian Development Bank (BNDES) and the Studies and Projects Financing Agency (Finep) signed a memorandum of understanding to develop Rio de Janeiro as a strategic data center hub. The agreement also includes the federal government, the city of Rio, and power utility Eletrobras.

 

The memorandum—focused on developing, financing, and installing high-capacity data centers in the city—is the first of its kind and could serve as a model for other states and municipalities.

 

Speaking at the Governance and Public Strategies in Artificial Intelligence forum, held in parallel with the BRICS summit at BNDES headquarters in Rio, the development lender’s Planning and Project Structuring Director, Nelson Barbosa, said the bank is evaluating the creation of a dedicated investment fund for data centers and AI.

 

Mr. Barbosa said BNDES plans to commit between R$500 million and R$1 billion to the fund as part of its renewed strategy for equity investments via BNDESPar, the bank’s equity investment arm. Last week, BNDES President Aloizio Mercadante announced that the bank will allocate R$10 billion to stock investments—half through direct stakes and half via private equity-style investment funds (FIPs).

 

“Of the R$5 billion allocated to funds, we’re evaluating a fund focused on data centers and AI, with a potential BNDES commitment of between R$500 million and R$1 billion,” Mr. Barbosa said.

 

Including potential private co-investment, the total size of the fund could reach between R$2.5 billion and R$5 billion. It would support various segments of the IT and AI ecosystem—from different data center models to algorithm development, applications, AI solutions, and hardware such as gaming technologies and creative industry tools.

 

Mr. Barbosa said BNDES has already deployed R$1.7 billion in the sector since 2023 through direct financing and investment fund participation. That includes R$1 billion in nine transactions involving hardware, data centers, and IT products; R$63 million in equity investments in two tech firms via BNDESPar; and R$700 million across seven investment funds focused on AI-enabled business models. The bank expects these funds to mobilize another R$2.3 billion in private capital, Mr. Barbosa said.

 

Finep President Luiz Antonio Elias said Brazil has a significant opportunity to position itself competitively in the global technology market by creating a “positive financing environment.” He highlighted the strategic nature of the new protocol.

 

“The memorandum offers a differentiated financing model involving Finep, BNDES, and Eletrobras, recognizing Rio’s unique opportunity. The city becomes more attractive for investment thanks to its existing connectivity infrastructure,” Mr. Elias told Valor, referring to the international submarine cables established during the 2016 Olympics.

 

The initiative aligns with Brazil’s National Artificial Intelligence Strategy, launched by the federal government last year. “[This agreement] represents a strategic initiative with significant economic, scientific, and technological impact,” Mr. Elias added.

 

Source: Valor International

https://valorinternational.globo.com

 

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07/04/2025

 

MERCOSUR SUMMIT SHOWCASES BRAZIL-ARGENTINA DIVISIONS

Lula promotes integration; Milei warns against economic rigidity

 

On the day Brazil assumed the rotating presidency of Mercosur, President Lula said the South American bloc serves as “a refuge where we feel safe” and shields its members from “foreign trade wars.” Speaking in Buenos Aires during the handover ceremony from Argentina, President Lula’s remarks stood in stark contrast to those of Argentine President Javier Milei, who warned against the bloc becoming an “iron curtain” for its members.

 

It was Mr. Lula’s first visit to Argentina since Mr. Milei took office. The two leaders did not hold a bilateral meeting, although President Lula visited former Argentine President Cristina Kirchner, signaling his political alignment.

 

“When the world becomes unstable and threatening, it’s natural to seek refuge where we feel secure. For Brazil, Mercosur is that place,” President Lula said during the 66th Mercosur Summit. “Over more than three decades, we’ve built a house with solid foundations, capable of withstanding storms. We’ve established a network of agreements that now includes associate states. All of South America has become a free trade area, grounded in clear and balanced rules.”

 

According to President Lula, the bloc’s Common External Tariff serves as protection against external trade conflicts. “Being part of Mercosur protects us,” he said, adding that member states must work together to preserve their autonomy in an increasingly polarized global context.

 

For its six-month presidency, Brazil has outlined five main priorities: strengthening trade within the bloc and with external partners, addressing climate change and promoting energy transition, advancing technological development, combating organized crime, and promoting citizens’ rights. President Lula said Brazil’s leadership will be a chance to reflect on “the place we aim to occupy on the new global chessboard.”

 

Standing beside Mr. Milei, President Lula renewed his support for deeper economic integration and reducing the bloc’s dependence on the U.S. dollar. He advocated for a payment system using local currencies to facilitate digital transactions, lower costs, and reduce exchange rate risks.

 

Strengthening trade within the bloc and with external partners will be a top priority, he said, citing the need to integrate the automotive and sugar sectors into the customs union. “Delaying this task means sacrificing the bloc’s strategic potential in the production of electric vehicles and biofuels,” President Lula said.

 

He also announced plans to advance trade negotiations with Canada and the United Arab Emirates. Within the region, he emphasized the need to engage with Panama and the Dominican Republic, as well as update existing agreements with Colombia and Ecuador. He also called for Mercosur to turn its attention to Asia, which he described as “the dynamic center of the global economy.”

 

In contrast, Mr. Milei emphasized that Argentina’s top interest in the bloc is opening new markets for its exports. In his closing speech as outgoing chair of Mercosur, the Argentine president called for greater economic freedom within the bloc and more flexible internal rules. He insisted that Mercosur cannot remain “an iron curtain” for its members.

 

“We urgently need more freedom. We’ve left behind decades of stagnation. Mercosur’s partners must decide whether they want to support the path we’ve embarked on. Either we move forward together or alone,” Mr. Milei said. In his view, the bloc should no longer be seen as “a shield that protects us from the world, but a spear that allows us to enter global markets.”

 

While neither leader directly criticized the other, the distance between them was evident. After the summit, President Lula visited Ms. Kirchner and posted a photo of them holding hands, wishing her strength in her “fight for justice.”

 

President Lula said his bond with Ms. Kirchner extends beyond formal relations. “It’s a friendship rooted in mutual affection, shared political ideals, and a common commitment to social justice and fighting inequality,” he wrote. Ms. Kirchner is currently under house arrest, serving a six-year sentence for corruption.

 

Source: Valor International

https://valorinternational.globo.com

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07/04/2025

 

SUPREME COURT SUSPENDS IOF DECREES, CALLS CONCILIATION HEARING

Justice Moraes questions legitimacy of tax hike while urging better dialogue between branches of government

 

Supreme Federal Court (STF) Justice Alexandre de Moraes on Friday (4) suspended both the executive and legislative decrees related to Brazil’s Financial Transactions Tax (IOF) and summoned representatives from the Presidency, Senate, Chamber of Deputies, and Office of the Prosecutor General (PGR) for a conciliation hearing on July 15.

 

The decision stems from cases filed by the Liberal Party (PL) and Socialism and Freedom Party (PSOL), as well as the Attorney General’s Office (AGU), regarding the legality of the IOF hike. While Mr. Moraes acknowledged the executive branch’s authority to adjust tax rates, he expressed concern over the “nature” of the recent increase.

 

“There is a serious and well-founded doubt about whether the presidential decree was used to adjust the IOF for purely fiscal purposes. In a preliminary assessment, this is enough to consider a potential abuse of power. If the president’s autonomous decrees are driven by a deviation of purpose, they may violate the principle of proportionality,” Mr. Moraes wrote.

 

He granted a preliminary injunction suspending Executive Decrees 12.466/2025, 12.467/2025, and 12.499/2025, as well as Legislative Decree 176/2025. The decision will now be sent to the full court for review, though no date has been set.

 

Allies with ministries also filed suit

 

In addition to the actions brought by the PL, PSOL, and AGU, a fourth case was filed Thursday night (3) by parties that hold ministerial positions in the Lula administration. These parties are asking the STF to declare constitutional the legislative decree that overturned the IOF increase.

 

Among the parties behind this request are Brazil Union, Progressives, and Republicans, which together control five ministries, including Tourism, Communications, Social Development, Sports, and Ports and Airports. Also joining the suite are Brazilian Social Democracy Party (PSDB), Solidarity, Democratic Renewal Party (PRD), Podemos, and Avante. They argue that “Congress acted properly in blocking measures that raised taxes without following the legislative process.”

 

Court battle deepens political crisis

 

The AGU’s move to file a case with the STF on Tuesday (1) to restore the IOF hike further strained relations between the Lula government and Congress. Lawmakers, particularly congressional leaders, were already upset over aggressive messaging on social media by the Workers’ Party (PT), which included AI-generated videos portraying Congress as “the enemy of the people.”

 

These attacks, part of a broader “rich vs. poor” narrative pushed by the government, specifically targeted Chamber Speaker Hugo Motta (Republicans of Paraíba). The polarization strategy had already drawn criticism from lawmakers and is expected to further deteriorate relations with the Legislature. In response, the Brazil Union-Progressives federation released its own video rebutting the campaign over the weekend.

 

Yesterday, before his party filed its own case against the executive, Congressman Arthur Lira (Progressive Party, PP, Alagoas), speaking at an event in Lisbon, called for de-escalation among all branches of government. “Everyone needs to take a step back—the Legislative, Judiciary, and Executive. They need to sit at the table and resolve this without letting tensions get this high,” said Mr. Lira, who previously served as Speaker of the Chamber.

 

According to him, both the Executive and Legislative were within their rights in the IOF dispute. “This will only be resolved through dialogue—and that’s what we’ve been working around the clock to make happen,” he said.

 

Source: Valor International

https://valorinternational.globo.com

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07/10/2025

 

BRAZIL’S INFLATION EXCEEDS TARGET CEILING FOR FIRST TIME UNDER NEW RULES

IPCA rose 0.24% in June and 5.35% over 12 months, breaching continuous target system of 4.5%

 

Brazil’s official inflation, as measured by the Extended Consumer Price Index (IPCA), rose 0.24% in June, slightly down from 0.26% in May, according to data released by the national statistics agency IBGE. While modest, it was the highest rate for the month of June since 2022, when inflation reached 0.67%.

 

The June figure came in above the median forecast of 0.19% from 33 financial institutions and consulting firms surveyed by Valor Data, Valor’s financial data provider. Forecasts ranged from 0.11% to 0.26%.

 

In the 12 months through June, inflation reached 5.35%, exceeding the upper limit of the Central Bank’s inflation target range for the first time since a new framework came into effect earlier this year. The current system sets a continuous target of 3%, with a tolerance band of 1.5% to 4.5%. If the 12-month IPCA remains outside this range for six consecutive months, the target is considered to have been breached.

 

Since January 2025, 12-month inflation has remained above the 4.5% ceiling. The June result marks the sixth consecutive month above the range, triggering a formal breach under the new rules set by the National Monetary Council (CMN).

 

Under the new framework, the Central Bank must now publish a semiannual open letter to the finance minister explaining the reasons for missing the target, the steps being taken to bring inflation back within the range, and the expected timeframe. The institution must also include a written explanation in its Monetary Policy Report, which replaces the previous Inflation Report published every quarter.

 

The inflation target system was revised to enhance predictability in monetary policy. Previously, the Central Bank aimed to meet an annual target based on end-of-year inflation. The shift to a continuous target requires the institution to manage inflation expectations more consistently over time.

 

For the 12-month figure, the median market expectation was 5.3%, according to Valor Data, with estimates ranging from 5.22% to 5.37%.

 

IBGE calculates the IPCA based on the consumption basket of households earning between one and 40 minimum wages, covering 10 metropolitan areas along with the cities of Goiânia, Campo Grande, Rio Branco, São Luís, Aracaju, and Brasília.

 

Price behavior by category

 

Of the nine spending categories used to calculate the index, five showed slower price increases in June compared to May. Food and beverages saw deflation of 0.18% in June after rising 0.17% the previous month. Slower inflation was also observed in housing (from 1.19% to 0.99%), health and personal care (from 0.54% to 0.07%), personal expenses (from 0.35% to 0.23%), and education (from 0.05% to zero).

 

On the other hand, price increases accelerated in household goods (from -0.27% to 0.08%), clothing (from 0.41% to 0.75%), transportation (from -0.37% to 0.27%), and communication (from 0.07% to 0.11%).

 

Diffusion and core inflation

 

Inflation became less widespread in June. The diffusion index, which tracks the share of goods and services with price increases, fell to 53.6% from 59.7% in May, according to Valor Data. Excluding food, which is among the most volatile categories, the index remained stable at 59.8%.

 

The average of the five core inflation measures tracked by the Central Bank slowed slightly to 0.29% in June from 0.30% in May, according to MCM Consultores. Over the 12-month period, the average of the core indexes rose to 5.23% from 5.17%.

 

Source: Valor International

https://valorinternational.globo.com

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07/11/2025

 

TRUMP’S TARIFF THREAT SEEN AS BIGGER RISK FOR INFLATION THAN GROWTH

Economists warn of secondary effects from currency, trade tensions

 

The 50% tariff announced by U.S. President Donald Trump on Brazilian exports is expected to have a limited direct impact on Brazil’s economy, but economists warn that the damage could escalate depending on how negotiations unfold.

 

Most analysts agree that the effects will be concentrated in specific sectors and companies. As a relatively closed economy, exports make up a modest share of Brazil’s GDP, and the United States, though Brazil’s second-largest buyer, accounts for just 12% of exports.

 

However, potential secondary effects warrant attention. Currency volatility, especially driven by heightened risk perception, could push up the exchange rate and reignite inflation. Foreign investment could also be affected if tensions with the U.S. escalate

 

Preliminary estimates from Bradesco BBI suggest the tariffs could cut $15 billion from exports this year, or 0.6% of GDP. BTG Pactual sees losses of $7 billion in 2025 and $13 billion in 2026, equal to 0.3% and 0.6% of GDP, respectively.

 

In a report, economists Iana Ferrão and Luiza Paparounis said the effective average tariff on Brazilian goods exported to the U.S. would jump from 1.3% in 2024 to 37.2% in 2025.

 

“Because the price elasticity of Brazil’s imports relative to the exchange rate is below 1 in the short term, an initial depreciation of the real does little to offset the external shock. This means both the trade surplus and current account are likely to deteriorate by roughly the same amount as the drop in exports,” they wrote.

 

XP Investimentos forecasts a 0.3 percentage point reduction in GDP growth in 2025 and 0.5 pp in 2026 if the tariffs take effect, with a drop in exports of $6.5 billion and $16.5 billion, respectively. The firm also expects tighter financial conditions. Oxford Economics, in contrast, projects a smaller loss—below 0.05 pp in both GDP and exports in 2026—and sees foreign direct investment (FDI) declining by 0.2 pp.

 

If Brazil enacts reciprocal measures, the impact would be greater. GDP could shrink by 0.1 pp, and FDI could fall as much as 0.5 pp.

 

“Trump’s letter may open the door to negotiations and reduce the final tariff. But we’re skeptical: Trump’s threat is unlikely to influence domestic Brazilian politics,” said Felipe Camargo, global chief economist at Oxford Economics.

 

Inflation impact

 

The inflation outlook remains more uncertain. Brazil’s price dynamics had been improving, helped by a stronger real, which had also influenced market expectations. But the exchange rate per U.S. dollar rose 1.79% in two days, halting that trend.

 

If the exchange rate stabilizes, some economists believe the tariff hike might temporarily ease inflation by boosting domestic supply of products usually shipped to the U.S., such as meat, coffee, and orange juice.

 

“There’s talk that beef prices could rise in the second half of the year, but these developments could cancel that out,” said Warren’s inflation strategist, Andréa Angelo. In her view, the exchange rate would only start affecting inflation if it reverses the gains of the first half and exceeds R$6 per dollar.

 

Santander shares a similar view. “We might see some downward pressure in the first two months. After that, it depends on the dollar’s path. If it stays around current levels, our inflation forecast doesn’t change much,” Adriano Valladão said. A worsening inflation scenario driven by the exchange rate would require the dollar to rise above R$5.80. On Thursday, the commercial rate closed at R$5.54.

 

XP does not expect a meaningful inflation impact if Brazil refrains from retaliation. But escalation could hit Brazil’s import basket, which includes fuel, chemicals, pharmaceuticals, and auto and aerospace components.

 

“For fuels, around 3% of gasoline and 5% of diesel consumed in Brazil come from the U.S. Substitution wouldn’t be easy, but it’s possible. The most critical area, however, is air travel: between 10% and 15% of aviation kerosene used in Brazil is imported from the U.S.,” the firm said. A 50% Brazilian tariff on these goods could add 0.05 pp to inflation through higher airfare.

 

No retreat expected from Trump

 

For UBS BB chief economist, Alexandre de Ázara, the 50% tariff on Brazilian products is unlikely to be rolled back. He argued that Mr. Trump’s grievances clash directly with the Brazilian government and judiciary: the legal situation of former president Jair Bolsonaro, Mr. Lula’s pro-Iran rhetoric and support for a BRICS currency alternative to the dollar, and what the American president sees as persecution of U.S. tech companies by Brazil’s Supreme Court.

 

“The Brazilian government needs to stop escalating first. What we’ve seen so far is that if a country retaliates, Trump always retaliates back,” Mr. Ázara said. He does not believe Mr. Trump will compromise on these issues.

 

The greater risk, he warned, lies in further escalation. “From an economic standpoint, de-escalation would be wiser. But that doesn’t seem to be the government’s path. If Brazil imposes a 50% tariff across the board, we might stop producing medicine, for instance, because a large share of the pharmaceutical industry’s inputs come from the U.S. And Trump could strike back again.”

 

Mr. Ázara does not rule out more drastic U.S. measures, such as restrictions on American investment in Brazil. “That could be very damaging and could severely impact the exchange rate,” he said.

 

Souce: Valor International

https://valorinternational.globo.com

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07/11/2025

 

AGRICULTURAL BONDS TO REMAIN TOP RURAL CREDIT SOURCE DESPITE NEW TAX

Bonds known as LCA expected to exceed R$700bn by 2026 under Crop Plan

 

Agribusiness Credit Bnds (LCAs) are set to remain the leading funding instrument for Brazil’s rural credit programs in the 2025/26 season, even with a proposed income tax on their returns. According to government projections, the outstanding volume of LCAs is expected to reach R$728 billion by May 2026, up from the current R$651 billion. Of this total, about 60% is earmarked for financing the agricultural sector.

 

The 2025/26 Crop Plan outlines R$594.4 billion in total rural credit, with LCAs accounting for R$328 billion, or 55% of the funding. In the 2024/25 cycle, they represented 43% of the total.

 

Currently, income earned from LCAs is exempt from taxation. However, the Ministry of Finance has proposed a 5% tax on earnings, included in Provisional Presidential Decree 1,303/2025, which still requires Congressional approval. If passed, the new rule would take effect in 2026. Despite the tax, Gilson Bittencourt, deputy secretary for agricultural policy and agro-environmental business at the Ministry of Finance, believes LCAs will remain attractive to investors.

 

“The Finance Ministry’s proposal to impose a 5% tax maintains LCAs’ advantage over other fixed-income instruments while also helping to fund interest rate subsidies in rural credit,” said Mr. Bittencourt.

 

He noted that high interest rates, particularly the current Selic level near 15% per year, made it unfeasible to keep loan interest rates unchanged in the new Crop Plan. “We wanted to avoid raising rates, but the numbers had to add up,” Mr. Bittencourt said during a media briefing after the plan’s release earlier this month. “In agriculture, the lower the rate, the better. But worse than a slightly higher rate is having no funds at all. That was the government’s main concern.”

 

Mr. Bittencourt also acknowledged that a drop in the Selic rate could reduce demand for LCAs, which are currently among the most profitable investment options. Nonetheless, investor familiarity with LCAs may help sustain demand even in a lower-rate environment.

 

Looking ahead, Mr. Bittencourt said the “ideal scenario” for agricultural policy would be a Selic rate of 8.5%—a projection that was common among economists and the government earlier in 2024. In such a scenario, LCAs could be issued at 90% of the benchmark rate plus a spread of up to 3%, resulting in single-digit loan interest rates for market-based credit lines. This would also increase the incentive for banks to use their own funds in rural lending, further easing the fiscal burden of subsidies.

 

However, Ivan Wedekin, a consultant and former secretary of agricultural policy at the Ministry of Agriculture, warned that taxing LCAs could hurt their competitiveness relative to other instruments, such as bank-issued CDBs, which are already taxed. He also voiced concerns about market confidence.

 

“Taxing one type of instrument sets a precedent. There’s now a risk that the government could raise the tax from 5% to 10% or even revoke exemptions altogether. That creates uncertainty across the market,” Mr. Wedekin told Valor.

 

The Agricultural Parliamentary Front (FPA) has also criticized the proposed taxation, echoing concerns that it could undermine trust in rural credit mechanisms.

 

Source: Valor International

https://valorinternational.globo.com

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07/14/2025

 

CHINA EXPANDS IN CONSUMER GOODS, NOW SUPPLIES 26% OF BRAZIL’S IMPORTS

Cars, electronics and home appliances drive Chinese dominance as U.S. loses share

 

Brazil’s reliance on American goods has dropped to near the lowest level in a decade, as China strengthens its dominance across a wide range of imports, including consumer products like cars, motorcycles, freezers, and stoves.

 

From January to June, Brazil imported $21.7 billion from the United States, up 11.5% from the same period in 2024. But this only accounted for 16% of total imports, the second-lowest share in the last ten years, just above the 15.5% in the first half of last year. In 2022, the U.S. share was 19.3%.

 

Amid China’s search for new markets under the threat of U.S. President Donald Trump’s tariffs, the country exported $35.7 billion to Brazil in the first six months of this year: 26.3% of Brazil’s total imports, a record high and up 22.2%.

 

China became Brazil’s top car exporter last year, even after Brazil imposed tariffs on electric vehicles. Chinese dominance has also expanded into small appliances and electronics, growing in strategic importance for Beijing.

 

Despite the introduction of import tariffs last year—starting at 10% in early 2024 and rising to 18% now—pure electric vehicles from China remain Brazil’s most imported cars.

 

In the first half of this year, Brazil imported $2.05 billion worth of vehicles from China, down from $2.58 billion in the same months of 2024 but up 713% from 2023. Argentina, once a key supplier, trailed far behind at $844 million.

 

Between 2022 and 2025, Brazil rose from China’s 17th to its sixth-largest vehicle export market, now representing 5.6% of the total.

 

This trend is mirrored in household appliances. During the second-hottest summer in Brazil’s history—second only to 2024—air conditioner imports from China jumped 67% to $498.5 million in the first half of 2025, after already surging 64% in the same period of 2024. Brazil moved from the 15th to the seventh-largest buyer of Chinese air conditioners from 2022 to 2025.

 

Imports of Chinese-made vacuum cleaners hit $51 million, up 26% from a year earlier.

 

Even when values declined, China remained the leading supplier. Imports of electric stoves, grills, and baking pans totaled $98.2 million—down from $113.7 million in 2024—but Germany, the second-largest supplier, shipped just $2.3 million.

 

Brazil imported $65.6 million in fully assembled televisions from China in the first half. Hong Kong ranked second at $7.1 million. Mobile phone imports from China, including parts and components, totaled $650.6 million, with Vietnam in second place at $291.5 million.

 

Chinese government trade data confirms Brazil’s growing importance. Between 2022 and 2025, Brazil climbed from 17th to sixth among China’s TV buyers, and from 19th to sixth in irons. It also rose from 16th to 12th in electric stoves and grills.

 

Brazil’s appetite

 

Lia Valls, professor at Rio de Janeiro State University (UERJ) and researcher at the Brazilian Institute of Economics of Getulio Vargas Foundation (FGV Ibre), said Brazilian purchases of Chinese goods are rising much faster than total imports. Volume growth, she explained, is especially striking.

 

In the 12 months through May, Brazilian imports from China rose 25.7% in value, data from the Foreign Trade Secretariat (SECEX) show. The FGV Ibre’s Foreign Trade Indicator (Icomex) puts volume growth at 37.2%.

 

By comparison, total Brazilian imports rose 12.2% in value and 16.7% in volume. From China alone, volumes jumped 35% in the first five months of 2025, versus a 12.4% increase in total imported volume.

 

Yet average prices of Chinese goods are falling. Icomex shows a drop of 8.1% in average import prices from China between January and May. Total import prices fell just 2.6%.

 

U.S. imports, on the other hand, rose 13% in volume over the same period, while prices were nearly flat, edging up just 0.2%. The U.S. remains Brazil’s second-largest supplier.

 

In February, Brazil imported a large offshore oil platform from China, classified as a non-recurring item. But Icomex data show the surge in Chinese import volumes is a long-term trend.

 

Between 2015 and 2024, Brazilian imports of Chinese goods by volume rose 146.2%. U.S. volumes increased just 1.1%, and imports from Argentina rose 21.9%. Meanwhile, average prices of Chinese imports fell 14.4%, while U.S. prices rose 50.9% and Argentine prices 7.3%.

 

Since 2006, China’s import volume to Brazil has multiplied by seven, while its average export price rose just 14%.

 

Trade surge

 

José Augusto de Castro, president of the Brazilian Foreign Trade Association (AEB), said imports have proven more resilient than expected this year, partly due to China’s role.

 

The import surge had a negative impact on Brazil’s GDP in the first quarter, despite a record grain harvest, said Livio Ribeiro, partner at BRCG and researcher at FGV Ibre. “It was very unusual. Even with the bumper crop, net trade dragged down GDP, which was unexpected.”

 

Data from Brazil’s national statistics agency IBGE show that exports of goods and services rose 2.9% in the first quarter versus the previous three months (seasonally adjusted), but imports climbed 5.9%.

 

SECEX figures show that China’s share of Brazilian imports rose from 23.3% in the first half of 2024 to 26.3% in the same period this year.

 

Regardless of the direction of Mr. Trump’s tariff policies, Mr. Castro said, China will continue expanding its export markets. “The world is adapting to this new China, a country that produces everything, competes in everything, and offers competitive prices in everything.”

 

Mr. Ribeiro said the future of Chinese imports in Brazil will depend less on the U.S. president’s policies and more on the strength of domestic lobbying efforts. “Brazil’s lobbies are stronger than average. Chinese oversupply could flood other countries like Chile or Colombia more than Brazil, where local lobbies are less organized. So Brazil is unlikely to face a full-blown flood of Chinese goods.”

 

The global tariff debate, he said, has thrown “some sand in the gears of global trade.” China is also struggling to boost domestic consumption and is seeking new markets for its industrial surplus.

 

Chinese carmakers gain ground

 

Tulio Cariello, research director at the Brazil-China Business Council, said China’s lead in car exports to Brazil is unsurprising. He noted that import tariffs for electric and hybrid vehicles will continue to rise through next year.

 

In 2025, electric cars without combustion engines were taxed at 18% through June. The rate rose to 25% this July and is scheduled to reach 35% in July 2026.

 

New Chinese brands such as GAC, Zeekr, Omoda & Jaecoo, and Leapmotor have followed BYD and GWM into the Brazilian market. “They realized there’s a market for EVs in Brazil. BYD created a positive image for Chinese cars, which are now almost synonymous with electric vehicles,” Mr. Cariello said.

 

Mr. Ribeiro said higher tariffs haven’t significantly curbed demand for Chinese EVs, which tend to be more expensive and less sensitive to price increases. “Tariffs reduced margins, but that wasn’t fully passed on to consumers. And even if it were, they’d still be cheaper than German or Swedish models.”

 

Chinese dominance extends to appliances and production chains

 

In appliances and white goods, Mr. Cariello noted that China’s dominance reflects years of industrial investment. When China opened to foreign investment, many U.S., European, and Japanese firms set up production there. “The Chinese learned, began making their own products, and started competing with global brands. In some cases, like air conditioners, they’re already ahead.”

 

He added that fierce competition among Chinese manufacturers helps keep prices low.

 

Chinese companies, said Mr. Castro of AEB, are quick to develop new products and win over markets. Data from SECEX illustrate this: Italy remains Brazil’s top dishwasher supplier, with shipments rising from $42 million in the first half of 2022 to $83 million in the same period this year. But China is catching up fast, doubling its exports to Brazil from $16.6 million to $51.6 million in the same period.

 

Mr. Cariello pointed out that while China leads in many categories, Southeast Asian countries are gaining ground as Chinese companies shift production for cost savings. In cell phones and parts, for instance, Vietnam and Malaysia follow China. For air conditioners, Thailand and Singapore are next.

 

“Each case is different, but there’s no doubt China will remain the dominant supplier in many sectors,” he said. “Chinese companies not only ship final products, they also produce key components. Smartphones and computers are good examples. China is involved in every step of the value chain, from critical minerals to components and design. One way or another, China is always present.”

 

Source: Valor International

https://valorinternational.globo.com

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07/15/2025

 

PREVI EXITS BRF, REJECTING MARFRIG OFFER

Pension of Banco do Brasil workers sheds stake after 30 years as investors, citing better price from market

 

One of BRF’s longest-standing shareholders, the pension fund for Banco do Brasil employees, has opted not to wait for the outcome of the merger with Marfrig. Previ closed its historic position last Friday (July 11), selling off its remaining shares, according to Pipeline and confirmed by the fund.

 

Previ had been a shareholder since the 1990s, originally through an investment in Perdigão, and remained in the company after its 2009 merger with Sadia. The fund was among the investors dissatisfied with the share swap terms proposed by Marfrig for the merger with BRF, arguing that it secured a better price for its beneficiaries by selling on the open market.

 

“The shares were sold at a price higher than what would have been offered to minority shareholders through the appraisal rights process if the BRF-Marfrig merger were finalized,” Previ said in a statement, emphasizing its more than 30-year history with the company.

 

“Previ believes the proposed exchange ratio in the merger does not adequately reflect BRF’s value, potentially leading to losses for minority shareholders and, by extension, for our members. By exiting before the merger’s completion, Previ protects participants’ assets and reaffirms its commitment to technical, well-founded decisions aligned with the best interests of the pension plan,” the statement added.

 

Previ’s exit rattled investors, with BRF shares dropping 4.55% on B3.

 

The fund’s departure may weaken the push by minority shareholders seeking better merger terms. Previ, along with asset manager Latache and a member of the Fontana family, had appealed to the Securities and Exchange Commission of Brazil (CVM), successfully delaying the shareholder meeting to vote on the merger twice—the latest postponement, granted last Friday, extended the process by another 21 days.

 

They are demanding further disclosure of the valuation study underpinning the share price and have also raised concerns about the involvement of Marfrig’s controlling shareholder, Marcos Molina, in the merger vote.

 

Meanwhile, Marfrig and Mr. Molina continue to buy up BRF shares. The company disclosed that its combined stake, together with Molina’s MAMS fund, has reached 58.87%. When the merger was announced in May, Marfrig held 50.5% of BRF. This increased stake means the merger could be approved even without minority shareholder support.

 

BTG Pactual has also been purchasing BRF shares in recent days. The bank disclosed it now holds a 7.79% stake in BRF and has derivatives involving call and put options on the stock. BTG did not specify whether the position is proprietary or on behalf of a client.

 

Source: Valor International

https://valorinternational.globo.com

 

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07/17/2025

 

BRAZIL FACES HURDLES REPLACING RUSSIAN DIESEL SUPPLY

Russia became top supplier in 2023, offering discounted fuel

 

Brazil could struggle to find alternative diesel suppliers if the United States imposes new sanctions on Russia, experts told Valor. Russia has been the country’s leading diesel source since 2023, offering the fuel at discounted prices amid international trade restrictions.

 

On Tuesday (15), NATO Secretary-General Mark Rutte warned that countries such as Brazil, China, and India could be affected by secondary sanctions threatened by U.S. President Donald Trump. The proposed measure would impose 100% tariffs on nations buying from Russia, unless Russian President Vladimir Putin agrees to a peace deal in Ukraine within 50 days.

 

From January to June, Russia was Brazil’s top diesel supplier, accounting for $2.5 billion in exports, according to data from Brazil’s Ministry of Development, Industry, and Foreign Trade (MDIC). The United States ranked second, with $1 billion. Currently, domestic production meets 70% of Brazil’s diesel demand, with the remaining 30% filled through imports.

 

According to Felipe Perez, an analyst at S&P, Brazil would face difficulties sourcing diesel elsewhere amid already tight global inventories. “If tariffs are extended to fuels, U.S. diesel will become less competitive for Brazil. India could be an option, but it is also a major importer of Russian diesel and could be subject to the same sanctions,” he said. Mr. Perez said Nigeria and Middle Eastern countries remain potential suppliers, though high freight costs and limited volumes could make them less viable.

 

Russia emerged as a key player in Brazil’s diesel imports in 2023, after Western sanctions over the war in Ukraine shut the country out of its traditional markets. To attract new buyers, Russia offered discounted fuel, prompting increased purchases by Brazil, India, and China.

 

That same year, Moscow temporarily halted diesel and gasoline exports to contain domestic price spikes, as crude oil prices neared $100 per barrel. The short-lived export ban heightened global concerns over the reliability of Russian supply, which is rarely governed by long-term contracts.

 

According to MDIC, Brazil set a record in 2023 by importing $4.5 billion in diesel from Russia. That trend has continued into 2024, with Russian diesel purchases totaling $5.4 billion—well ahead of the $1.4 billion in imports from the U.S. For comparison, in 2022, Russian diesel accounted for just $95 million in Brazilian imports, ranking Russia eighth among suppliers. That year, the U.S. led the list, with $8 billion in sales.

 

Sergio Araujo, president of the Brazilian Association of Fuel Importers (ABICOM), said Brazil will likely face a challenge in finding an alternative supplier that can meet its needs. The situation would worsen, he said, if sanctions also affect China and India, creating global demand that outpaces supply. “That scenario would shake up the market. The U.S. could be an alternative, but I’m not sure U.S. refineries have the capacity to scale up production enough,” said Mr. Araujo. “If global supply falls short, prices will surge, adding pressure to inflation.”

 

ABICOM members importing Russian diesel are waiting to see if Mr. Trump’s threats materialize. According to an industry source, most Russian diesel buyers in Brazil are independent operators.

 

Asked for comment, Acelen, the owner of the Mataripe refinery in Bahia, said it does not purchase Russian diesel. Raízen declined to comment, while Vibra did not reply to Valor’s request for comment.

 

Petrobras also said it does not buy crude oil or refined products from Russia. In a statement, the state-run company said diesel imports are driven by market conditions. “Petrobras’s global operations, through its international trading subsidiaries, allow it to import from a range of suppliers, primarily from the U.S., India, and the Persian Gulf region.”

 

Thiago Vetter, an analyst at StoneX, sees NATO putting pressure on Brazil and other nations, but said the likelihood of sanctions being enforced remains low. “I consider the chance of secondary tariffs on Russian buyers remote, given the importance of these markets to the U.S. economy,” he said. In his view, even if Russian diesel were cut off, there is little risk of a fuel shortage in Brazil. Companies could replace Russian diesel, but it would come at a higher cost, he added.

 

Source: Valor International

https://valorinternational.globo.com

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07/18/2025

 

BRAZIL SETS NEW MONTHLY RECORD FOR BEEF EXPORTS

The volume of exports in June reached 341,550 tonnes, up 41%

 

 

Brazilian beef exports soared to a record high in June, reaching 341,550 tonnes, a 41% increase year over year, the Brazilian Association of Meatpackers (Abrafrigo) reported Thursday, citing federal data. This figure surpassed the previous monthly record of 319,290 tonnes set in October 2024.

 

June export revenues jumped 55% to $1.505 billion. In the first half of the year, total beef and byproduct exports generated $7.446 billion in revenue, up 28%, with volumes rising 17.3% to 1.69 million tonnes.

 

China remains Brazil’s top customer, importing 631,900 tonnes in the semester—an 11.3% increase in volume and 27.4% growth in revenue, which totaled $3.204 billion. The U.S., the second-largest buyer, significantly expanded its imports by 85.4% in volume and 99.8% in revenue, purchasing 411,700 tonnes worth $1.287 billion between January and June.

 

China accounted for 43% of Brazil’s beef export revenues and 37.4% of volumes in the period. The U.S. share was 24.4% of volume and 17.3% of revenue.

 

However, the outlook has darkened following the U.S. decision to impose a 50% tariff on Brazilian beef starting August 1. According to Abrafrigo, the measure could cost the Brazilian cattle industry around $1.3 billion.

 

Source: Valor International

https://valorinternational.globo.com

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07/21/2025

 

PUBLIC DEBT WILL KEEP RISING WITHOUT TOUGH FISCAL REFORM, STUDY WARNS

MCM 4Intelligence projects debt-to-GDP ratio above 100% in multiple scenarios within 10 years

 

Brazil’s public debt is on track to exceed 100% of GDP within the next decade, even if a mild fiscal reform package is approved, according to a study by consultancy MCM 4Intelligence. The analysis, which ran thousands of simulations based on Brazil’s economic and fiscal performance over the past 20 years, highlights growing concerns among economists ahead of this year’s elections.

 

In a scenario where no policy changes are made, there is a 53% chance that the debt-to-GDP ratio will surpass 100% within ten years, with a 61% probability of crossing this threshold at any point during that period. The baseline assumptions include a real interest rate of 5%, average GDP growth of 2.4%, and a primary surplus of 0.5% of GDP. Brazil’s gross debt currently stands at 76.1% of GDP.

 

Under a scenario involving diluted reforms, the probability of debt exceeding 100% within a decade still reaches 25%, rising to 32% when considering the possibility of it happening at any point in the next ten years. This projection assumes that, starting in 2027, the government achieves an average primary surplus of 1.5% of GDP through a set of measures: delinking healthcare and education spending from GDP growth and adjusting them only for inflation; indexing pensions and other social benefits to inflation plus half of real GDP growth; cutting wage bonuses to half the minimum wage; reducing legal tax exemptions by 10%—which the Finance Ministry estimates at over R$800 billion—and trimming parliamentary budget earmarks by 10%, from R$50.4 billion in 2025.

 

The study’s conclusions diverge sharply from the outlook of Dario Durigan, the Executive Secretary at the Finance Ministry. Speaking at a Brazilian Development Bank (BNDES) event earlier this month, Mr. Durigan said it was possible to resolve Brazil’s debt challenge within five years “through spending controls and fiscal rebuilding.” He acknowledged that returning to primary surpluses at the current Selic interest rate level is “neither viable nor feasible,” but suggested there was room for interest rate cuts “soon.”

 

The analysis by economists Alexandre Teixeira, Renan Martins, and political consultant Ricardo Ribeiro uses stochastic modeling, which employs historical averages and standard deviations of key variables to generate thousands of possible debt trajectories.

 

“The advantage of this method is that it produces not just a single forecast but a wide range of possible outcomes, allowing us to gauge the likelihood of specific events,” said Mr. Teixeira.

 

The diluted reform scenario was designed as a softer version of a much stricter package that has been circulating among market economists in recent months. The harsher version, however, is widely seen as politically unfeasible, given strong opposition from President Luiz Inácio Lula da Silva and powerful congressional lobbies. It includes eliminating real increases for pensions and social benefits, tightening eligibility for welfare programs such as the BPC, ending the wage bonus, making deeper cuts to tax expenditures, and slashing parliamentary amendments to the average level seen between 2020 and 2024.

 

According to MCM’s estimates, such a strict package could generate an average primary surplus of approximately 3% of GDP over ten years. “With this level of fiscal adjustment, it’s not hard to show the debt could be stabilized,” Mr. Teixeira noted.

 

Other institutions have reached similar conclusions. A recent World Bank study estimated the effort needed to stabilize Brazil’s debt trajectory at 3% of GDP. The Independent Fiscal Institution (IFI) calculated the required primary surplus at 2.4%.

 

A tougher fiscal adjustment could lead to a 3% primary surplus within a decade, MCM says

 

The study also tested a third scenario, using the same parameters as the diluted reform case but with two adjustments: it assumes the reforms enhance fiscal credibility, lowering the real interest rate to 4.5%—the same level recorded between 2016 and 2019 after the approval of Brazil’s spending cap—and reducing interest rate volatility by halving its standard deviation.

 

In this case, the probability of debt exceeding 100% of GDP virtually disappears. “The key takeaway is that investors need to view the reform as sufficient. For any reform to be effective, it must clearly signal debt stabilization,” Mr. Teixeira said. “A reform that is too lenient may not achieve this goal.”

 

Other institutions, such as IFI, have also published stochastic scenarios, though typically based on their baseline cases. In its latest Fiscal Monitoring Report, IFI estimated a 72.7% chance of gross debt surpassing 90% of GDP by 2029.

 

In the annexes to the 2026 Budget Guidelines Bill (PLDO), the government indicated that the likelihood of debt exceeding 100% of GDP is low and only materializes in an “adverse scenario” involving a 100 basis point Selic rate shock starting in September 2025.

 

The Finance Ministry, through its press office, said Mr. Durigan’s comments reflect the baseline scenario prepared by the National Treasury’s technical team, which assumes compliance with the fiscal targets set in the new framework. Under this scenario, debt peaks at 84% of GDP in 2029 before declining gradually. This aligns with the Treasury’s latest Fiscal Projections Report, which forecasts a debt peak of 84.3% of GDP in 2028.

 

The ministry added that its projections “rely on parameters consistent with current macroeconomic conditions and reaffirm the economic team’s commitment to gradual, responsible, and sustainable fiscal consolidation.”

 

A recent report by Warren Investimentos did not assign probabilities but outlined three potential scenarios. Not even the baseline scenario—which includes indexing the minimum wage to inflation from 2027 and freezing public sector wages until 2030—was able to stabilize debt by 2035. Only in the “adjustment scenario” does gross debt decline after peaking at 92% of GDP in 2029. In this case, the primary surplus would reach 1.7% of GDP by 2030 and 2.0% by 2035.

 

However, the measures in this scenario appear politically challenging: ending the minimum wage valuation rule and freezing public sector wages; abolishing the wage bonus; changing the minimum spending rules for healthcare and education; halving parliamentary earmarks; and cutting the federal contribution to the Fundeb education fund from 23% to 19%.

 

Source: Valr International

https://valorinternational.globo.com

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07/21/2025

 

VIVARA TO ELECT NEW CHAIR AS FOUNDER STEPS DOWN FOR HEALTH REASONS

Marina Kaufman Bueno Neto to take over as board chair at jewelry retailer

 

Vivara, Brazil’s largest jewelry chain, confirmed on Friday (18) key leadership changes previously reported by Valor. Citing health reasons, founder and majority shareholder Nelson Kaufman will step down as chair of the board. His daughter, Marina Kaufman Bueno Neto, currently vice chair and with the company since 2007, will take over the role. Mr. Kaufman will remain a signatory to the shareholders’ agreement.

 

Paulo Kruglensky, Mr. Kaufman’s nephew, was named vice chair. A former CEO who led one of the company’s most significant growth periods, Mr. Kruglensky spent 17 years at Vivara before stepping down in 2024. His departure followed Mr. Kaufman’s controversial decision to retake the helm of the company.

 

Mr. Kaufman submitted his resignation on Friday, and the changes will be formally approved at an extraordinary shareholders’ meeting. Valor has learned that Icaro Borrello will remain CEO and that the company is discussing initiatives to improve metrics such as cash flow and margins.

 

Mr. Kaufman suffered a stroke last year and is recovering gradually, which prompted the decision to strengthen the board. The company declined to comment.

 

Source: Valor International

https://valorinternational.globo.com

 

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07/22/2025

 

U.S. COMPANIES TAKE LEGAL ACTION AGAINST TRUMP OVER ‘BRAZIL TARIFF’

Two orange juice importers argue the tariff on Brazil will slash profits and drive up retail prices

 

Two U.S. importers have taken the first step in challenging Donald Trump’s proposed sanctions against Brazil, laying out arguments that could pave the way for similar actions by other companies and intensify pressure on Washington.

 

On July 18, orange juice importers Johanna Foods and Johanna Beverage Company filed a request for declaratory and injunctive relief with the U.S. Court of International Trade in New York, aiming to block Trump’s threat to impose 50% tariffs on Brazilian goods.

 

Based in Flemington, New Jersey, the plaintiffs are premium food manufacturers, producers, and distributors of fruit juices, beverages, and yogurts.

 

In the lawsuit, the companies argue that the proposed tariffs—set to take effect on August 1—exceed the president’s authority under the International Emergency Economic Powers Act and constitute an unconstitutional delegation of power.

 

Robert Facchina, executive director of both companies, stated in a declaration attached to the 150-page lawsuit that the tariff would harm the group financially, increase retail prices by roughly 20% to 25% for consumers, and could trigger layoffs in the U.S.

 

“Brazil’s tariff will result in a significant, and perhaps prohibitive, price increase on a staple of the American breakfast,” the importers warn.

 

The filing also challenges the rationale behind Mr. Trump’s proposed tariff, citing his reference to “the way Brazil treated former President Bolsonaro,” “Brazil’s insidious attacks on free elections and the fundamental rights of Americans to freedom of expression,” and “the long-standing and very unfair trade relationship.”

 

The suit notes that Mr. Trump’s letter does not cite any legal or statutory basis for imposing a 50% tariff against Brazil. It asserts that the letter “does not constitute proper executive action, is not an Executive Order, does not refer to or incorporate any Executive Orders, or modify or amend any existing Executive Order.”

 

Moreover, the document points out that Mr. Trump “has not identified any unusual or extraordinary threat originating outside the U.S. that is a threat to the national security, foreign policy, or economy of the U.S.,” nor has he “declared a national emergency as the basis for imposing the Brazil Tariff.”

 

The two importers claim that Mr. Trump’s imposition of a 50%—or higher—tariff on Brazilian orange juice will cause substantial and immediate financial harm to both their companies and American consumers.

 

Brazil is the world’s leading producer of orange juice and the second-largest supplier to the U.S., accounting for more than half of all orange juice sold in the American market.

 

“The 50% tariff imposed on Brazil by the Trump administration will significantly affect the petitioners’ businesses, resulting in an estimated additional cost of at least $68 million over a twelve-month period, which exceeds any single year of profits in the petitioners’ 30-year history,” the importers state in their complaint.

 

They argue that the imposition of the tariffs undermines their ability to plan, fulfill production requirements, and manage cash flow, “as the additional costs impose an immediate and uncontrollable financial burden that our current profit margins cannot absorb.”

 

Without “relief from these tariffs,” the importers warn they will face potential layoffs of unionized employees, reduced production capacity, and an existential threat to the long-term viability of their operations. Together, the companies support nearly 700 jobs in the U.S. and make significant contributions to the economies of New Jersey and Washington.

 

They further argue that the increased costs associated with the so-called Brazil Tariff will compel them to raise prices for customers, leading to an estimated 20% to 25% hike in retail prices for consumers.

 

The filing also highlights the steep decline in domestic orange juice production—particularly in Florida—which has dropped by more than 95% over the past 25 years due to citrus greening disease, hurricanes, and urban sprawl, rendering the U.S. supply insufficient for its production needs.

 

According to the plaintiffs, Florida’s orange harvest for 2025 is projected to fall by approximately 33% compared to last year, marking the lowest output in 95 years. Brazil and Mexico now account for roughly 95% of U.S. orange juice imports.

 

In conclusion, the companies assert that the imposition of the Brazil Tariff—particularly the 50% rate—is unlawful and urge the court to bar the Trump administration from enforcing the measure.

 

Source: Valor International

https://valorinternational.globo.com

________________________________________

07/22/2025

 

GOL AND AZUL ARGUE CODESHARE DEAL BEFORE CADE

Antitrust agency flagged deal after airlines announced merger talks

 

Gol and Azul have denied before Brazil’s Administrative Council for Economic Defense (CADE) that their codeshare agreement constitutes an “associative contract” or violates competition law. The two carriers submitted their responses to CADE late Friday (18), addressing inquiries from Commissioner Carlos Jacques, the case rapporteur reviewing the partnership.

 

In May 2024, Gol and Azul announced their codeshare agreement. Earlier this year, they also opened talks on a potential merger. Back in April, CADE’s technical division, the Superintendence-General (SG), had argued that the codeshare deal should have been reported to the antitrust authority and amounted in practice to an “associative contract” between rivals. Although the SG archived the case, the CADE Tribunal later reopened it. If CADE’s commissioners find that the agreement was improperly executed without prior notification, the airlines could face fines.

 

One of the commissioner’s main questions was whether Gol or Azul had discontinued any overlapping routes after the codeshare agreement took effect.

 

Gol responded that changes in flight networks—including frequencies, connections, and schedules—are routine in the airline industry and were not influenced by the codeshare deal. The company stated that, based on routes with overlapping services at the time of the codeshare signing and flight schedules published by Brazil’s civil aviation regulator (ANAC), two regular overlapping routes were discontinued. However, Gol did not specify which routes.

 

Gol further argued that labeling the codeshare as an associative contract is “based on incorrect premises and is fundamentally flawed.”

 

“It is impossible to equate the codeshare agreement with precedents involving actual infrastructure sharing,” the airline said. Gol maintained that the SG’s conclusion was based on the mistaken assumption that codeshare agreements involve shared infrastructure. Gol insisted the agreement involves only code-sharing, without the creation of a joint enterprise or shared risks and returns, thereby ruling out classification as an associative contract.

 

Azul echoed this argument in its response, emphasizing that flights sold through the codeshare account for only a small portion of its total revenue.

 

Azul also stated that since the codeshare’s implementation, there has been no integration or sharing of operational systems, airport infrastructure (including staff or check-in counters), or any essential assets for conducting business.

 

Furthermore, Azul argued that the agreement does not include joint pricing arrangements. “The parties do not exchange any pricing or operational information that could lead to any coordination between their activities,” the company said.

 

Eric Hadmann Jasper, an attorney and professor of economic law, said it is “natural” for Gol and Azul to frame their codeshare agreement within precedents that do not treat such arrangements as associative contracts.

 

He added that CADE could, in principle, fine the airlines. “However, there have been cases where CADE found that a transaction should have been notified but refrained from applying a fine, citing unclear precedents and regulations,” Mr. Jasper noted.

 

In a recent interview with Valor, CADE President Gustavo Augusto pointed to the codeshare agreement as one of the Tribunal’s top cases for the second half of the year.

 

“I expect the Tribunal will address these issues in the coming semester, and even if we find no infraction, we may still require that the codeshare be formally notified and reviewed. Depending on the Tribunal’s decision, it could also influence the direction of the proposed merger,” he said.

 

Gol declined to comment, and Azul did not immediately respond to requests for comment.

 

Source: Valor International

https://valorinternational.globo.com

________________________________________

07/15/2025

 

PREVI EXITS BRF, REJECTING MARFRIG OFFER

Pension of Banco do Brasil workers sheds stake after 30 years as investors, citing better price from market

 

One of BRF’s longest-standing shareholders, the pension fund for Banco do Brasil employees, has opted not to wait for the outcome of the merger with Marfrig. Previ closed its historic position last Friday (July 11), selling off its remaining shares, according to Pipeline and confirmed by the fund.

 

Previ had been a shareholder since the 1990s, originally through an investment in Perdigão, and remained in the company after its 2009 merger with Sadia. The fund was among the investors dissatisfied with the share swap terms proposed by Marfrig for the merger with BRF, arguing that it secured a better price for its beneficiaries by selling on the open market.

 

“The shares were sold at a price higher than what would have been offered to minority shareholders through the appraisal rights process if the BRF-Marfrig merger were finalized,” Previ said in a statement, emphasizing its more than 30-year history with the company.

 

“Previ believes the proposed exchange ratio in the merger does not adequately reflect BRF’s value, potentially leading to losses for minority shareholders and, by extension, for our members. By exiting before the merger’s completion, Previ protects participants’ assets and reaffirms its commitment to technical, well-founded decisions aligned with the best interests of the pension plan,” the statement added.

 

Previ’s exit rattled investors, with BRF shares dropping 4.55% on B3.

 

The fund’s departure may weaken the push by minority shareholders seeking better merger terms. Previ, along with asset manager Latache and a member of the Fontana family, had appealed to the Securities and Exchange Commission of Brazil (CVM), successfully delaying the shareholder meeting to vote on the merger twice—the latest postponement, granted last Friday, extended the process by another 21 days.

 

They are demanding further disclosure of the valuation study underpinning the share price and have also raised concerns about the involvement of Marfrig’s controlling shareholder, Marcos Molina, in the merger vote.

 

Meanwhile, Marfrig and Mr. Molina continue to buy up BRF shares. The company disclosed that its combined stake, together with Molina’s MAMS fund, has reached 58.87%. When the merger was announced in May, Marfrig held 50.5% of BRF. This increased stake means the merger could be approved even without minority shareholder support.

 

BTG Pactual has also been purchasing BRF shares in recent days. The bank disclosed it now holds a 7.79% stake in BRF and has derivatives involving call and put options on the stock. BTG did not specify whether the position is proprietary or on behalf of a client.

 

Source: Valor International

https://valorinternational.globo.com

_______________________________________

07/25/2025

 

U.S. EYES BRAZIL’S RARE EARTHS AS LULA GOVERNMENT PUSHES FOR TALKS

Finance Minister Fernando Haddad signals credit line to support Brazilian companies hit by potential U.S. tariffs

 

With the United States showing interest in Brazil’s so-called rare earths, the Lula administration on Thursday (24) called on Washington to return to the negotiating table to find an alternative to the 50% import tariff announced by President Donald Trump.

 

Finance Minister Fernando Haddad publicly reinforced the government’s strategy, advising business leaders to challenge the measure in U.S. courts in an effort to mitigate the impact of the unilateral decision. He also revealed that the contingency plan to be submitted to President Lula includes a range of proposals, including a credit line.

 

Mr. Haddad said more than 10,000 Brazilian companies could be harmed by the tariff hike, which is set to take effect on August 1. The government has tried to negotiate a solution—relying on backchannel communications through political and business intermediaries to appeal to Mr. Trump—but has received little response from the White House.

 

In light of the situation, the government is preparing a support package for affected Brazilian firms. Minister Haddad said a “menu of measures” is ready and will be presented to Mr. Lula next week. It will be up to the Brazilian president to decide which ones to implement and to what extent.

 

“This is a political decision that necessarily rests with him, given the sensitivity and importance of the issue,” Mr. Haddad said in an interview with Itatiaia radio. He declined to give further details, but confirmed the plan includes a credit line and measures “permitted under international law.”

 

On the investigations by U.S. authorities into Brazil’s Pix instant payment system, Mr. Haddad suggested the U.S. may be motivated by profit.

 

“Pix is now being accepted in Europe, in the U.S., in Argentina, at no cost to those countries. Who is that hurting? It’s hurting those who profit from financial transactions,” he said.

 

President Lula said Thursday that Mr. Trump has shown no interest in negotiating a way out of the trade conflict. In his view, if Mr. Trump truly wanted a resolution, he would have already made a phone call, which hasn’t happened.

 

President Lula said he is good at “playing cards” and warned that if Mr. Trump is bluffing, he’s ready to call it and double the challenge. “Brazil is used to negotiating,” he added during an event in Minas Gerais.

 

President Lula also demanded respect from the U.S. government and challenged Mr. Trump to explain “what his problem is” with Brazil, while warning that retaliation is on the table. “If the United States wants to negotiate, Lula is ready to negotiate. But I only take disrespect from Dona Lindu,” he added, referring to his late mother. He implied that American discomfort may stem from Brazil’s regulation of social media and the success of Pix.

 

Race for strategic minerals

 

In his speech, Mr. Lula also mentioned U.S. interest in Brazil’s strategic mineral resources.

 

“We have 12% of the world’s fresh water to protect. We have 215 million people to protect. We have all our oil to protect. All our gold to protect. All the rich minerals you want to protect. And no one touches them. This country belongs to the Brazilian people,” he said.

 

The remark was a response to reports that the U.S. chargé d’affaires in Brasília told representatives of the Brazilian Mining Institute (IBRAM) that the United States is interested in reaching agreements with the Brazilian government to secure access to so-called critical and strategic minerals such as lithium, niobium, and rare earths. In response, he was reportedly told that any such negotiations must be led by the federal government, not by private-sector executives.

 

Global competition for these strategic minerals, which are crucial for technological development and the energy transition, is at the heart of growing tensions between the United States and China. These resources are essential for sectors such as defense, telecommunications, and energy.

 

Vice President Geraldo Alckmin, who also serves as Minister of Development, Industry, Trade, and Services, said there is “a very long agenda to explore and advance” in ongoing talks with the U.S. when asked specifically about American interest in critical minerals.

 

“There are countless areas,” he said, referring to discussions he has had in recent days with representatives from several sectors, including mining.

 

Mr. Alckmin also met on Saturday (19) with U.S. Commerce Secretary Howard Lutnick. The vice president described the 50-minute conversation as positive and said Brazil reaffirmed its willingness to negotiate with the United States.

 

Source: Valor International

https://valorinternational.globo.com

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07/25/2025

 

CORN ETHANOL PRODUCER FS RESUMES EXPANSION WITH R$2BN INVESTMENT

Company to build new plant in Mato Grosso following financial recovery

 

FS, Brazil’s second-largest corn ethanol producer, has resumed its expansion strategy after a three-year pause marked by financial strain. The company announced on Thursday (24) a R$2 billion investment to build its fourth corn ethanol plant, to be located in Campo Novo do Parecis, in the state of Mato Grosso.

 

The decision to move forward with expansion follows two crop years of financial tightening, during which FS faced rising debt levels stemming from earlier investments amid reduced cash flow. At the close of the 2023/24 harvest, the company’s leverage ratio (net debt to EBITDA) stood at 6.34 times, increasing to 7.39 times by the end of the first quarter of the 2024/25 crop year.

 

However, that ratio dropped to 2.52 times by the end of the most recent harvest, supported by a rebound in ethanol prices and higher sales volumes.

 

With healthier finances and rising demand anticipated due to a higher ethanol blend in gasoline, FS decided the time was right to revive its growth strategy.

 

Construction of the new plant began in June and is scheduled for completion by December 2026. Once operational, the facility will have an annual production capacity of 540 million liters of ethanol, 350,000 tonnes of DDG and DDGS (animal feed co-products), 69,000 tonnes of corn oil, and 56,000 megawatt-hours (MWh) of electricity.

 

In a statement, CEO Rafael Abud said the decision to invest in Campo Novo do Parecis was “reinforced by the approval of the Future Fuel project, which paved the way for E30 and soon E35.” Starting August 1, Brazil will increase the mandatory blend of anhydrous ethanol in gasoline from 27% to 30%.

 

Despite the operational improvements, FS still lacks access to lower-cost credit lines. In its latest rating review on July 1, Moody’s reaffirmed the company’s “AA-.br” rating on the national scale and “Ba3” globally, but with a negative outlook, citing persistent inflation and high interest rates in Brazil.

 

Moody’s noted that while FS has reduced its leverage, the company’s interest coverage remains under pressure, and any new funding raised in the domestic market is likely to come at a higher cost. In the most recent harvest, FS’s interest coverage ratio (EBIT to interest expenses) was 1.7 times—typically considered insufficient, as the market expects this metric to exceed 2.0 times for financial comfort.

 

The new investment will raise FS’s capital expenditures this season. Last season, the company spent R$370.9 million on expansion-related capex, primarily for incremental capacity improvements at its existing facilities. Even with those investments, FS posted R$1.32 billion in net operating cash flow after capex.

 

The company’s growth plan also includes a fifth plant in Querência (Mato Grosso), where preliminary work such as site grading and basic infrastructure is already underway. FS has yet to disclose the investment amount or financing details for that project. The company also declined to comment on how it plans to finance the fourth plant or what return on investment it expects.

 

Source: Valor International

https://valorinternational.globo.com

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07/25/2025

 

BRAZIL NEARS INTERNET UNIVERSALIZATION

Streaming services reach 25% of households in 2024, banking access is growing with use of Pix, and almost every household has cell phones

 

In 2024, the Brazilian population had almost universal access to the internet; access to online banking services was also rapidly expanding, influenced, among other factors, by Pix; video streaming services were accessed in one in four homes; and nearly 100% of households had cell phones.

 

Last year, the country still had 20.5 million people without internet access; 2.1 million households lacked any kind of phone; and access to technology and related services was still limited to higher-income households.

 

This snapshot of access to technology in the country was detailed by the Brazilian Institute of Geography and Statistics (IBGE). On Thursday (24), IBGE released the Continuous PNAD: Characteristics of Information and Communication Technology survey (PNAD TIC). Conducted annually, the survey measures the evolution of Brazilians’ access to technological services and devices.

 

Among the 188.5 million people aged 10 or older in the country, 89.1%, or 168 million, declared to have internet access, 2.1% more than in 2023 (164.528 million). In total, internet access already reaches 93.6% of all households in 2024—compared with 92.5% in 2023.

 

The growth rate of internet access in households has been gradually decreasing in each survey round. This lower level of annual growth, the researchers reported, reflects an almost universal access to the internet in Brazil.

 

Among the reasons for accessing the internet, mapped by IBGE, “accessing banks and other financial institutions” was the one that showed the greatest growth between 2023 and 2024. “More and more people are using banks through mobile apps, for example,” commented Leonardo Quesada, an IBGE researcher.

 

Asked if the result could also have been impacted by increased use of Pix, the expert agreed that “it’s a reasonable hypothesis.”

 

On the other hand, 20.5 million people still had no internet access in 2024, or 10.9% of people aged over 10. In practice, 5.1 million households in the country had no internet access.

 

Lack of knowledge about the service and economic reasons were mentioned as reasons. Of those who did not use the internet, 45.6% reported not knowing how to use it, followed by those declaring lack of need (28.5%); expensive service (7.5%), and expensive equipment (3.4%).

 

Streaming gains

 

Another aspect surveyed was the use of video streaming services in the country, which reached 43.4% of Brazilian households with TV sets, or 32.654 million households, in 2024. In 2023, they were accessed in 42.1% of households with TV sets, or 31.107 million. Around 1.5 million households began to access streaming services between 2023 and 2024.

 

Cell phone use reached 97% of all households last year, higher than in 2023 (96.7%) and the highest share in the historical series since 2016 (93.1%).

 

This means that, last year, the country had 167.5 million people aged 10 or over with cell phones, 88.9% of the population in this age group. However, in 2024, 20.9 million people in Brazil still did not have a cell phone, representing 11.1% of the population aged 10 and over. The survey also showed that 2.1 million households did not have any kind of phone.

 

“We see that where [tech] equipment is available, the average income is much higher,” Mr. Quesada said. “Income is an important factor in explaining these differences, but, for example, when it comes to cell phone ownership, the cost of the device is still an important factor,” he noted.

 

In the IBGE survey, the main reason for not having a cell phone among public school students—that is, among students who don’t pay tuition, and mostly come from lower income households—was that the device was too expensive (27.7%). However, when private school students who did not have a device were asked the same question, the main reason was concern about privacy or security (33.4%).

 

In the results on lack of a phone and other services provided by tech devices, IBGE researchers also noted regional disparities.

 

The lack of phone access remained highest in 2024 in households in the Northeast (absence in 4.7% of households in the region) and North (3.2%). In the other, wealthier regions, this percentage did not exceed 2% for the same year.

 

Also last year, 24.3% of households in the country had access to a paid cable or satellite television service. However, in the Southeast region, the wealthiest in the country, the percentage was 31.1%. In the North and Northeast, the share was, respectively, 16.5% and 13% last year.

 

In the case of paid video streaming services, the average real monthly income per capita in households with this service was R$2,950 in 2024. In those without the service, it was less than half, R$1,390.

 

Source: Valor International

https://valorinternational.globo.com

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07/28/2025

 

RECIPROCAL U.S. TRADE RETALIATION WOULD SHRINK BRAZIL’S GDP

Study suggests opening to other markets would soften the blow

 

Brazil could benefit from a trade retaliation strategy against the United States, if the federal government opts for one, that shifts the focus from tit-for-tat tariffs to broader trade liberalization. The idea would be to lower import tariffs on goods from other countries while maintaining current rates for U.S. products, according to André Valério, head of macroeconomic research at Inter bank, and his assistant Gustavo Menezes.

 

In a previous analysis, Inter’s chief economist, Rafaela Vitória, found that the impact of the proposed U.S. tariffs on the Brazilian economy would be relatively small, due to the country’s low trade openness and limited exposure to the U.S. market. A key assumption in that assessment was that Brazil would not retaliate by matching the 50% tariff on American goods.

 

So far, the Brazilian government says it aims to resolve the dispute through diplomatic channels. Still, retaliatory measures have been floated as a potential course of action.

 

Unlike its trade relationships with many other countries, the United States runs a trade surplus with Brazil, exporting more than it imports. That dynamic would make the U.S. economy more vulnerable to Brazilian retaliation than in most trade disputes. However, a tit-for-tat response—imposing a 50% tariff on U.S. imports—would also hurt Brazil, the economists said.

 

“Taxing these imports could trigger a ripple effect across multiple sectors, particularly in manufacturing, which heavily depends on intermediate inputs,” wrote Mr. Valério and Mr. Menezes in their study.

 

Smaller GDP

 

Their general equilibrium model estimates that a proportional retaliation would reduce Brazil’s GDP by 0.17 percentage point, on top of the damage from the U.S. tariffs themselves.

 

Though this may seem like a modest aggregate effect, it would be broad-based: 56 out of 66 sectors analyzed would experience losses in this scenario. Chemical manufacturing and oil refining would each see production shrink more than 6 percentage points, the study said. The broader manufacturing industry would contract by 2.1 points.

 

Sugar refining would also suffer a 3.8-point drop, largely due to its reliance on transportation and fuel, both directly affected by tariffs.

 

The negative production impact stems from the tariff shock: retaliatory tariffs would effectively raise taxes on the chemical industry by 3 points and on oil refining by 2.5 points. Even agriculture would be affected, with an effective tax hike of 1.2 points due to a 4.5-point increase on agricultural chemicals. That would shrink farm output by 3.4 points and agrochemical manufacturing by 4.4 points.

 

The most heavily taxed individual product would be mineral coal, where the 50-point tariff hike on U.S. imports would translate into an effective tax of 18.8 points. “Ironically, the domestic coal sector—the one most protected by the tariff—would be among the hardest hit, because of its heavy reliance on chemical inputs. This highlights the potential harm of a retaliation policy that overlooks sectoral complexities,” wrote Mr. Valério and Mr. Menezes.

 

Next in line would be various chemical products, with an 11.9-point tax hike on inorganic chemicals and 4 points on organic chemicals, as well as capital goods, which—even if not mostly sourced from the U.S.—lack local substitutes.

 

“This analysis suggests retaliation would not be a beneficial strategy for Brazil, as it would deepen distortions in the economy,” the economists said.

 

Redirection of imports

 

An alternative that does not appear to be under government consideration, they said, would be retaliating by reducing import tariffs for goods from the rest of the world, while keeping U.S. tariffs unchanged. This could lead to a redirection of imports.

 

For instance, a 10-point across-the-board tariff cut on imports from other countries could raise Brazil’s GDP by 0.12 point, benefiting 57 of the 66 sectors analyzed.

 

“Petroleum refining, one of the hardest-hit sectors under reciprocal retaliation, would be among the biggest winners in the alternative scenario, where import taxes from other countries are cut. This is an important factor in weighing potential retaliation strategies, since refining has a strong export role in the Brazilian economy,” the economists wrote.

 

In that case, oil refining output would rise 3.5 points, chemical manufacturing 5.4 points, and both sugar refining and agriculture by 3 points or more.

 

The biggest tax relief on any single product would be for electronic components, down 9.9 points, followed by chemicals, fish, coal, and various capital goods—“reflecting differences in Brazil’s import profile from the U.S. versus other countries,” Mr. Valério and Mr. Menezes said.

 

Sectors hit hardest by reciprocal tariffs would also be the biggest winners from the alternative response. In addition, apparel manufacturing, IT, automobiles, and auto parts would benefit, especially from lower tariffs on electronic components.

 

“These simulations show how distortive tariffs can be and suggest that a more beneficial response would be to further open the economy to international trade,” the authors concluded.

 

Source: Valor International

https://valorinternational.globo.com

 

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07/29/2025

 

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

 

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.

 

Source: Valor International

https://valorinternational.globo.com

 

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07/30/2025

 

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

 

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.

 

Source: Valor International

https://valorinternational.globo.com

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Brazilian industries calculate losses, seek new markets

Affected sectors still believe exceptions list may be expanded, but see tariff hike in effect for months

 

 

 

08/01/2025

Industries affected by the 50% tariff imposed on Brazilian exports to the U.S. estimate billions in losses and are already seeking new markets for their products, believing that the surcharge will make business with the northern country unfeasible. Affected sectors still believe that the list of exceptions may be expanded, but the perception is that the tariff hike will be in effect for months, starting August 6th.

In the aluminum industry, the impact could reach R$1.15 billion by the end of the year, according to estimates from the Brazilian Aluminum Association (Abal). This figure represents direct losses already suffered and projected losses after the 50% tariffs enter into effect. According to Abal, although the surcharge is not cumulative with the tariffs already in effect since June, around one-third of Brazilian exports to the American market are already at risk.

“In 2024, the United States was the third-largest export destination, behind Canada and Norway, accounting for 14.2% of foreign sales, or $773 million. It is estimated that about a third of this total is currently subject to the 50% tariffs, which will make access to the American market unfeasible for several products,” Abal says.

The effects of rising tariffs are already being felt. In the first half of the year, Brazilian exports subject to Section 232 plummeted 28% compared with the first half of 2024, resulting in $ 46 million in losses. This reduction reflects previous tariff hikes of 10% and 25%, now aggravated by the new 50% tariff.

Although alumina, a raw material for primary aluminum production, has been excluded from the list of tariffed products, Abal warns of a systemic risk to the supply chain. In 2024, Brazil exported 1.3 million tons of alumina to the U.S., a volume essential to produce 90% of American primary aluminum. Brazil also supplies Canada with alumina for 64% of the country’s aluminum production, which supplies a share of U.S. industrial demand. “The disruption of regional complementarity could affect supply, redirect trade flows, and compromise the predictability of operations in the three countries.”

After being exempted from the 50% tariffs, the Brazilian pig iron industry faces the challenge of resuming suspended shipments and the production halted by trade uncertainty. In 2024, Brazil produced 3.8 million tons of pig iron, and 85% of the sector’s exports were shipped to the U.S. The inclusion of pig iron in the exemption list was considered crucial to avoid layoffs and widespread shutdowns.

According to Fausto Varela, president of Sindifer, the association of independent mills in the state of Minas Gerais, the challenge is to overcome logistical and operational obstacles that have piled up in recent weeks. “We halted cargo shipment for three ships that were scheduled to depart in August, and now we are talking with buyers to resume operations,” Mr. Varela told Valor.

The state of Paraná’s forestry industry is seeking government support to reduce losses. Apre Florestas, an association of 47 Paraná companies, intends to request subsidized financing and advance tax credits. “From now on, we will establish new strategies,” said Fábio Brun, president of the association.

Apre Florestas will ask the Paraná government that access to credit be provided through the Regional Development Bank (BRDE) for payroll payments; advance tax credits for timber exporters; and flexible payment terms, which are part of a Paraná program aimed at supporting businesses. Apre Florestas also wants to join other business associations to monitor the federal government’s negotiations but believes that the new tariff will be in place for the next six months.

Forestry companies are planning initiatives such as expanding their markets for the products that will no longer be exported to the U.S.

According to the 2024 Apre Sector Report, wood pulp, which was included in the exception list, accounts for 8.64% of the state’s forest-based products sold to the U.S. The other main forest-based products, like wooden frames, wooden doors, pine plywood, and pine sawn timber, among others, have not been exempted from new 50% tariff.

Apre Florestas is still estimating the financial impact of the tariff hike on the Paraná forestry industry. In the first half of the year, exports to the United States generated $ 331 million, in line with the same period last year.

The Brazilian Food Industry Association (ABIA) also considered the exemption list “limited,” a measure that undermines the predictability of trade between U.S. and Brazil. While orange juice—which totaled nearly $750 million in exports in the first half of 2025—was exempt from the additional tariff, other heavily exported products, such as meat, coffee, and vegetable oils, were not.

ABIA released a statement saying the decision “jeopardize the predictability of bilateral trade and creates distortions in value chains.”

According to ABIA’s estimates, based on exports to the U.S., which totaled $2.83 billion in the first half of the year, a hypothetical 10% decline in export volume would result in losses of up to $570 million annually in foreign revenues. ABIA stated that it “advocates cooperative and balanced solutions.”

(Carolina Mainardes contributed reporting.)

*By Robson Rodrigues, Helena Benfica  and Stella Fontes  — São Paulo and Ponta Grossa, Paraná

Source: Valor International

https://valorinternational.globo.com

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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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