{"id":92617,"date":"2025-01-22T14:36:06","date_gmt":"2025-01-22T17:36:06","guid":{"rendered":"https:\/\/murray.adv.br\/?p=92617"},"modified":"2025-01-22T14:36:10","modified_gmt":"2025-01-22T17:36:10","slug":"trumps-return-escalates-tensions-for-brazils-economy","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/trumps-return-escalates-tensions-for-brazils-economy\/","title":{"rendered":"Trump\u2019s return escalates tensions for Brazil\u2019s economy"},"content":{"rendered":"\n<h6 class=\"wp-block-heading has-text-align-center\"><em>Concerns mount over potential U.S. trade retaliations against Brazil amid an already challenging economic outlook<\/em><\/h6>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p>01\/22\/2025 <\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<p>The return of Donald Trump to the U.S. presidency has introduced an additional layer of uncertainty to Brazil\u2019s already challenging economic landscape, analysts warn.<\/p>\n\n\n\n<p>Over the past two years, Brazil\u2019s \u201cstrongly expansionist\u201d fiscal stance has pushed the economy beyond its potential, raising inflationary risks. This domestic backdrop now intersects with \u201cstrong headwinds from abroad,\u201d which are expected to worsen, wrote Silvia Matos and Armando Castelar in the January edition of the FGV Ibre Macro Bulletin, shared exclusively with Valor.<\/p>\n\n\n\n<p>For Elizabeth Johnson, an analyst at TS Lombard, Mr. Trump\u2019s return adds another element of unpredictability to Brazil\u2019s economic prospects. Despite being one of the least U.S.-dependent nations in Latin America and running a trade deficit with the country, \u201cthere\u2019s concern that Brazil and its leftist leader, President Lula, could become easy targets for Trump as he pushes his \u2018America First\u2019 agenda,\u201d Ms. Johnson explained in a report to clients.<\/p>\n\n\n\n<p>FGV Ibre researcher Lia Valls also recalled Mr. Trump\u2019s past comments about Brazil\u2019s \u201chigh import tariffs\u201d and lack of reciprocity, raising the possibility of Section 301 investigations. This U.S. trade law allows for retaliatory actions if American companies are deemed disadvantaged.<\/p>\n\n\n\n<p>Ms. Valls explained that with the WTO dispute resolution mechanism currently paralyzed by U.S. blockages, Brazil could face difficulties in challenging such measures or imposing counter-retaliation. \u201cAs during Trump\u2019s first term, the way forward is through negotiation,\u201d she said.<\/p>\n\n\n\n<p>While a blanket increase in tariffs on Brazilian goods seems unlikely, Ms. Valls did not rule out sector-specific hikes, particularly on steel or possibly meat products, influenced by U.S. industry lobbying.<\/p>\n\n\n\n<p><strong>Global trade war<\/strong><\/p>\n\n\n\n<p>Indirect impacts could be equally significant. Ms. Johnson of TS Lombard warned that a promised trade war could destabilize China\u2014Brazil\u2019s largest trading partner\u2014and the global economy. Facing multiple challenges, including soaring public debt, high inflation, and slowing growth, Brazil risks a hard landing ahead of its 2026 presidential elections, especially if the trade conflict disrupts agricultural exports or prompts populist policy measures to manage the fallout.<\/p>\n\n\n\n<p>Luis Ot\u00e1vio Leal, chief economist at G5 Partners, noted that Mr. Trump\u2019s apparent moderation toward China during his inaugural speech, alongside his recent outreach to Chinese President Xi Jinping, might indicate a willingness to negotiate. However, this could harm Brazil\u2019s soybean exports, which had benefited during Mr. Trump\u2019s first term due to U.S.-China trade tensions.<\/p>\n\n\n\n<p>\u201cI don\u2019t believe lightning strikes twice,\u201d Mr. Leal said. \u201cI think regarding China and the U.S., Brazil will be harmed either way. Whether due to a reduction in international trade, a global trade war, or because the U.S. and China reach an agreement, which would reduce our agricultural exports there.\u201d<\/p>\n\n\n\n<p>China currently absorbs nearly 75% of Brazil\u2019s soybean exports. While the 2025 soybean harvest is largely secured, a U.S.-China agreement in the first half of the year could jeopardize Brazil\u2019s mid-year corn exports and the 2026 harvest, Mr. Leal added.<\/p>\n\n\n\n<p>Brazil\u2019s commitment to non-alignment in foreign policy and trade could be tested by intensifying U.S.-China tensions. Ms. Valls of FGV Ibre emphasized the significance of Brazil signing the Mercosur-European Union trade agreement as a step toward diversifying its trade relations.<\/p>\n\n\n\n<p>\u201cThe agreement still requires approvals and, even once approved, includes a tariff reduction schedule that spans up to 18 years in some cases. However, it could result in trade diversion from U.S. imports, particularly in the industrial sector. Notably, a framework was negotiated for the treatment of critical minerals, which could affect U.S. interests in this area,\u201d Ms. Valls noted.<\/p>\n\n\n\n<p>At the same time, China has been preparing for potential U.S. retaliation under Mr. Trump. In late 2024, during Chinese President Xi Jinping\u2019s visit to Brazil, the two nations signed 37 agreements, including memoranda on technology, health, and innovation. Significantly, China opened its market to Brazilian sorghum exports, a move Ms. Valls interpreted as a preemptive strategy against potential U.S.-China conflicts.<\/p>\n\n\n\n<p><strong>Paris Agreement<\/strong><\/p>\n\n\n\n<p>Mr. Trump\u2019s withdrawal from the Paris Agreement, executive orders curtailing incentives for the energy transition, and announcements of increased oil production signal that the U.S. is \u201cturning its back on the world,\u201d Mr. Leal of G5 Partners warned. He noted that these actions could present challenges for Brazil, which holds a key position in global climate discussions, and potentially undermine the COP30 climate conference set for November in Bel\u00e9m.<\/p>\n\n\n\n<p>Diplomatically, Brazil\u2019s 2025 presidency of the BRICS bloc\u2014with members including China, Russia, and Iran\u2014adds another layer of complexity. The U.S. has long viewed BRICS with skepticism, and any renewed discussions about a common currency within the bloc could provoke retaliatory actions from the Trump administration, Mr. Leal cautioned. As BRICS president, \u201cBrazil will be in the spotlight,\u201d he said, and Mr. Trump will not hesitate to push back if the bloc challenges U.S. interests.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p>*By\u00a0Marta Watanabe,\u00a0Marcelo Osakabe\u00a0e\u00a0Ana\u00efs Fernandes\u00a0\u2014 S\u00e3o Paulo<\/p>\n\n\n\n<p>Source: Valor International<\/p>\n\n\n\n<figure class=\"wp-block-embed\"><div class=\"wp-block-embed__wrapper\">\nhttps:\/\/valorinternational.globo.com\/\n<\/div><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>Concerns mount over potential U.S. trade retaliations against Brazil amid an already challenging economic outlook 01\/22\/2025 The return of Donald Trump to the U.S. presidency has introduced an additional layer of uncertainty to Brazil\u2019s already challenging economic landscape, analysts warn. Over the past two years, Brazil\u2019s \u201cstrongly expansionist\u201d fiscal stance has pushed the economy beyond [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8106],"tags":[25804,25803],"class_list":["post-92617","post","type-post","status-publish","format-standard","hentry","category-murray-news","tag-tensions-for-brazils-economy","tag-trumps-return"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Trump\u2019s return escalates tensions for Brazil\u2019s economy - Murray Advogados<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/murray.adv.br\/en\/trumps-return-escalates-tensions-for-brazils-economy\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Trump\u2019s return escalates tensions for Brazil\u2019s economy - Murray Advogados\" \/>\n<meta property=\"og:description\" content=\"Concerns mount over potential U.S. trade retaliations against Brazil amid an already challenging economic outlook 01\/22\/2025 The return of Donald Trump to the U.S. presidency has introduced an additional layer of uncertainty to Brazil\u2019s already challenging economic landscape, analysts warn. 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