Exporters propose emergency measures against Trump tariffs

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.

• Sector-specific aid a greater risk than U.S. tariffs, economist warns
• Redirecting exports is slow and difficult, experts say
• State-run banks may scale back aid after Trump’s tariff exemptions

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.

• New U.S. tariff threatens jobs in Brazil and could “export” industry

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.

• Coffee, beef, textiles, minerals are among hardest hit by tariffs hikes
• The smooth path of those focused solely on Brazil’s coffee market
• At 20, Orfeu expands organic coffee farming and targets foreign markets

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.