{"id":93033,"date":"2025-02-18T18:29:14","date_gmt":"2025-02-18T21:29:14","guid":{"rendered":"https:\/\/murray.adv.br\/?p=93033"},"modified":"2025-02-18T18:30:38","modified_gmt":"2025-02-18T21:30:38","slug":"93033","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/93033\/","title":{"rendered":"Brazil advised to play nice amid tougher trade talks with U.S."},"content":{"rendered":"\n
Building convergent agenda with Washington\u2019s interests and avoiding war of words in media would be best bet, they say<\/strong><\/em><\/h6>\n\n\n\n

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02\/18\/2025 <\/p>\n\n\n\n

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Brazil is likely to face greater challenges in renegotiating the impact of tariffs imposed by U.S. President Donald Trump during his second term compared to his first. While it would be helpful to avoid a war of words in the media and especially over politics, which could hinder negotiations, Brazil also could do well by developing a convergent agenda with the new U.S. administration.<\/p>\n\n\n\n

This was one of the recommendations from analysts and economists at an event organized by the American Chamber of Commerce for Brazil (Amcham Brazil). They also noted that reducing domestic uncertainty could help mitigate potential external shocks affecting an economy already expected to see modest growth this year.<\/p>\n\n\n\n

The first issue at hand is the 25% tariff on Brazilian steel and aluminum. According to Christopher Garman, executive director for the Americas at Eurasia Group, the process to mitigate tariff impacts will resemble 2018\u2019s, albeit more challenging. \u201cPreviously, American producers dependent on foreign steel also exerted pressure. Brazil\u2019s task is again to engage with these buyers and highlight the importance of Brazilian products,\u201d he said.<\/p>\n\n\n\n

Unlike during his first term, the Republican president is now more convinced that tariffs are the right tool to boost the economy and create jobs in the U.S. Evidence of this includes announcements made without full clearance or planning from his team, such as the 25% tariffs on Mexico and Canada, which were temporarily suspended less than 24 hours later.<\/p>\n\n\n\n

\u201cThe bottom line is that they were retracted not because they were a mere negotiating bluster, but because they weren\u2019t well-aligned,\u201d argues Mr. Garman, indicating that part of the private sector remains complacent on the issue.<\/p>\n\n\n\n

Mr. Garman highlights that the Trump administration is prioritizing renegotiating tariffs with partners in the United States-Mexico-Canada Agreement (USMCA), also known as NAFTA 2.0, delaying any resolution with Brazil.<\/p>\n\n\n\n

Another contentious issue is reciprocal tariffs. Former U.S. Ambassador to Brazil Todd Chapman described Brazil as one of the \u201ckings\u201d of tariffs to protect national interests, alongside China. He cited ethanol as an example, where Brazil exports four times more in value terms to the U.S. than the inverse flow.<\/p>\n\n\n\n

\u201cBrazil has high tariffs, we have low tariffs. Why should we allow nearly free access to the world\u2019s largest market without reciprocal access?\u201d he summarized.<\/p>\n\n\n\n

Bradesco chief economist Fernando Honorato notes that Brazil is somewhat shielded from the U.S.\u2019s focus, given its trade deficits with the U.S. and the relatively insignificant trade flow between the two countries.<\/p>\n\n\n\n

\u201cEven an aggressive 25% tariff might reduce exports by $7 million to $10 million, minimally impacting Brazil\u2019s trade balance,\u201d he commented. \u201cReciprocity poses a risk. I\u2019m more concerned about sector-specific impacts than broader macroeconomic ones.\u201d<\/p>\n\n\n\n

This scenario, however, underscores the risks that the lack of stability brings to Brazil\u2019s economic outlook. \u201cWithout this anchor, external developments could quickly swing us from side to side, complicating the Central Bank\u2019s task,\u201d added Mr. Honorato.<\/p>\n\n\n\n

Ana Paula Vescovi, Santander\u2019s chief economist, warned of potentially indirect impacts from the new American president\u2019s more protectionist stance on the global economy and Brazil, even if all threats aren\u2019t realized.<\/p>\n\n\n\n

A more fragmented global economy, combined with mass deportation policies, points to an economy with lower growth potential and higher inflation risk, she indicated. These measures cast doubt on the Federal Reserve\u2019s ability to maintain its interest rate cut cycle.<\/p>\n\n\n\n

\u201cThese macroeconomic risks and a stronger dollar in the medium term are concerns for the Brazilian economy,\u201d Ms. Vescovi stated, noting that U.S. inflation expectations have been climbing since the end of last year, which could influence the Fed\u2019s policy actions and inflation convergence.<\/p>\n\n\n\n

To navigate these risks, Mr. Chapman advocated for greater private sector involvement in government negotiations. \u201cInternational relations are too important to be left solely to government officials,\u201d he affirmed.<\/p>\n\n\n\n

He suggested considering investments in the U.S. as a strategy, citing companies like Gerdau and JBS, which already operate in the country.<\/p>\n\n\n\n

Mr. Garman echoed this sentiment. \u201cIt won\u2019t be easy, so there\u2019s all the more reason to engage aggressively and highlight Brazil\u2019s alignment with American interests,\u201d he said. \u201cBrazil is a critical supplier of minerals for the defense industry. The U.S. is also focused on energy security and reducing dependency on China in key supply chains. Brazil plays important roles in these areas.\u201d<\/p>\n\n\n\n

*By Marcelo Osakabe e Marta Watanabe \u2014 S\u00e3o Paulo<\/p>\n\n\n\n

Source: Valor International<\/p>\n\n\n\n

\nhttps:\/\/valorinternational.globo.com\/\n<\/div><\/figure>\n","protected":false},"excerpt":{"rendered":"

Building convergent agenda with Washington\u2019s interests and avoiding war of words in media would be best bet, they say 02\/18\/2025 Brazil is likely to face greater challenges in renegotiating the impact of tariffs imposed by U.S. President Donald Trump during his second term compared to his first. 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