Trump tariffs, EU law disrupt Brazil’s agricultural geopolitics

According to Ambassador Rubens Barbosa, president of the Institute of International Relations and Foreign Trade (Irice), trade tensions with the U.S. are more serious than the effects of the EU regulation and present a more immediate concern for Brazil.

He notes that in the dispute with the U.S., agribusiness is not the most impacted sector of the Brazilian economy. Mr. Barbosa believes industries like aviation, aluminum, and steel, which export higher value-added and high-tech products, stand to lose more, while agribusiness remains a strong commodity exporter.

“There will be consequences, but we don’t yet know what tariff level Brazil will negotiate with the U.S. Even if it ends up above the previous 10%, we could still remain competitive in agricultural exports, but we’ll need to negotiate,” Mr. Barbosa told Valor.

Still, there are products whose exportation could become unfeasible, such as beef, where the price per tonne could jump by about $3,000, according to projections from Agrifatto. Coffee, orange juice, and eggs are also expected to see shipments severely impacted.

The U.S. remains one of Brazil’s key trade partners, accounting for 12% of exports and 15.5% of total imports in 2024. “If Brazil escalates retaliation, as China did, it could backfire. We have more to lose than gain,” warned Cicero Zanetti de Lima, a researcher at FGV Agro, the agribusiness studies center at Fundação Getulio Vargas.

Roughly 30% of Brazilian exports to the U.S.—about $12.1 billion—come from agribusiness. Conversely, agricultural imports from the U.S. represent just 2.5% of Brazil’s total, primarily inputs. Mr. Lima explained that more expensive U.S. inputs could push up domestic food prices in Brazil.

“Another serious issue is that, with the tariff in place, it will be nearly impossible to divert products like coffee and orange juice originally bound for the U.S. to other markets. This is a red flag,” he said.

Like the U.S., the EU is also one of Brazil’s biggest buyers of coffee and orange juice. With rising protectionist signals, the European Commission has classified Brazil as a standard risk country under the EU Deforestation Regulation (EUDR), which bans imports of products originating from both illegal and legally permitted deforestation under Brazilian law.

There is widespread uncertainty about the required documentation and how the law will be enforced. Rubens Ricupero, a diplomat and former finance minister, highlighted that Brazil’s agribusiness is vulnerable on deforestation issues. He argued this should be an opportunity to crack down on illegal deforesters and reduce Brazil’s risk classification under the EU law. “The sector itself should take the lead in showing it is serious about this issue,” he said.

Because Brazil was rated as a standard risk country under the EUDR, its products are likely to be deprioritized in favor of those from lower-risk suppliers, warned Agroicone managing partner Rodrigo Lima.

“Importers will naturally prefer sourcing from countries with the lowest possible risk to avoid EU fines,” he said. “Even if Brazilian coffee is excellent, buyers may opt for lower-risk suppliers,” he added. Vietnam, for example, is a major coffee supplier classified as low risk.

Marcos Matos, general director of the Brazilian Coffee Exporters Council (Cecafe), said coffee industry representatives traveled to the EU in May after the EUDR risk classification was announced, lobbying for risk to be assessed by region rather than nationally. “We see there is room to educate buyers about Brazilian coffee and the country’s regional diversity,” he said.