{"id":95217,"date":"2025-08-01T21:55:56","date_gmt":"2025-08-02T00:55:56","guid":{"rendered":"https:\/\/murray.adv.br\/?p=95217"},"modified":"2025-08-01T21:55:56","modified_gmt":"2025-08-02T00:55:56","slug":"newsletter-murray-advogados-july-2025","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/newsletter-murray-advogados-july-2025\/","title":{"rendered":"NEWSLETTER – MURRAY ADVOGADOS JULY 2025"},"content":{"rendered":"

NEWSLETTER<\/strong><\/p>\n

MURRAY ADVOGADOS<\/strong><\/p>\n

JULY 2025<\/strong><\/p>\n

 <\/p>\n

07\/01\/2025<\/p>\n

BRAZIL WANTS TO INCLUDE CARS AND SUGAR IN MERCOSUR<\/u><\/strong><\/p>\n

The Lula administration aims to give strategic sectors preferential treatment during its presidency of the bloc<\/em><\/strong><\/p>\n

 <\/p>\n

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\u2019s common trade regime, according to the country\u2019s Foreign Ministry, known as Itamaraty. The initiative is expected to be one of President Lula\u2019s top priorities for the regional group in 2025.<\/p>\n

 <\/p>\n

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\u2019s common trade framework since the bloc was created 34 years ago.<\/p>\n

 <\/p>\n

\u201cOur goal is to include the automotive sector in Mercosur, and we will continue working toward a regional agreement in this area,\u201d said Ambassador Gisela Maria Figueiredo Padovan, secretary for Latin America and the Caribbean at Brazil\u2019s Ministry of Foreign Affairs, who is leading the negotiations.<\/p>\n

 <\/p>\n

Ms. Padovan said the Brazilian government has already drafted a proposal outlining a new common industrial policy for the regional auto sector. \u201cWe\u2019ve submitted a draft agreement aimed at establishing a shared industrial policy. Just between Brazil and Argentina, autos account for 50% of bilateral trade\u2014that\u2019s highly significant. We\u2019re pursuing a deal that will be mutually beneficial,\u201d she said.<\/p>\n

 <\/p>\n

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\u2019s foreign ministry.<\/p>\n

 <\/p>\n

\u201cIn the case of sugar, we\u2019re 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,\u201d Mr. Cannabrava said.<\/p>\n

 <\/p>\n

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. \u201cWe\u2019re working on terms of reference to figure out how sugar can be included in Mercosur in a way that\u2019s a win-win for everyone. These terms could be developed by respected institutions like the IDB,\u201d he added.<\/p>\n

 <\/p>\n

Brazil\u2019s 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\u2019s previous Mercosur presidency, which secured exemptions for 50 new products.<\/p>\n

 <\/p>\n

According to Brazilian officials, a final agreement could be reached during the next Mercosur summit, scheduled for July 2\u20133 in Buenos Aires. The exception list allows member countries to apply different external tariffs to specific goods, giving them more flexibility within the bloc\u2019s broader trade structure.<\/p>\n

 <\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

\u00a0<\/strong><\/p>\n

________________________________________<\/strong><\/p>\n

07\/02\/2025<\/p>\n

 <\/p>\n

DEVELOPMENT LENDERS TEST NEW FUNDING STRATEGY FOR AI, DATA CENTERS<\/u><\/strong><\/p>\n

BNDES and Finep sign agreement aiming to turn Rio into high-capacity data hub; exploring R$1bn AI investment fund<\/em><\/strong><\/p>\n

\u00a0<\/em><\/strong><\/p>\n

Brazil\u2019s leading development institutions are ramping up efforts to attract artificial intelligence (AI) investments and boost the country\u2019s 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.<\/p>\n

 <\/p>\n

The memorandum\u2014focused on developing, financing, and installing high-capacity data centers in the city\u2014is the first of its kind and could serve as a model for other states and municipalities.<\/p>\n

 <\/p>\n

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\u2019s Planning and Project Structuring Director, Nelson Barbosa, said the bank is evaluating the creation of a dedicated investment fund for data centers and AI.<\/p>\n

 <\/p>\n

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\u2019s equity investment arm. Last week, BNDES President Aloizio Mercadante announced that the bank will allocate R$10 billion to stock investments\u2014half through direct stakes and half via private equity-style investment funds (FIPs).<\/p>\n

 <\/p>\n

\u201cOf the R$5 billion allocated to funds, we\u2019re evaluating a fund focused on data centers and AI, with a potential BNDES commitment of between R$500 million and R$1 billion,\u201d Mr. Barbosa said.<\/p>\n

 <\/p>\n

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\u2014from different data center models to algorithm development, applications, AI solutions, and hardware such as gaming technologies and creative industry tools.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

Finep President Luiz Antonio Elias said Brazil has a significant opportunity to position itself competitively in the global technology market by creating a \u201cpositive financing environment.\u201d He highlighted the strategic nature of the new protocol.<\/p>\n

 <\/p>\n

\u201cThe memorandum offers a differentiated financing model involving Finep, BNDES, and Eletrobras, recognizing Rio\u2019s unique opportunity. The city becomes more attractive for investment thanks to its existing connectivity infrastructure,\u201d Mr. Elias told Valor, referring to the international submarine cables established during the 2016 Olympics.<\/p>\n

 <\/p>\n

The initiative aligns with Brazil\u2019s National Artificial Intelligence Strategy, launched by the federal government last year. \u201c[This agreement] represents a strategic initiative with significant economic, scientific, and technological impact,\u201d Mr. Elias added.<\/p>\n

 <\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

 <\/p>\n

________________________________________<\/strong><\/p>\n

07\/04\/2025<\/p>\n

 <\/p>\n

MERCOSUR SUMMIT SHOWCASES BRAZIL-ARGENTINA DIVISIONS<\/u><\/strong><\/p>\n

Lula promotes integration; Milei warns against economic rigidity<\/em><\/strong><\/p>\n

 <\/p>\n

On the day Brazil assumed the rotating presidency of Mercosur, President Lula said the South American bloc serves as \u201ca refuge where we feel safe\u201d and shields its members from \u201cforeign trade wars.\u201d Speaking in Buenos Aires during the handover ceremony from Argentina, President Lula\u2019s remarks stood in stark contrast to those of Argentine President Javier Milei, who warned against the bloc becoming an \u201ciron curtain\u201d for its members.<\/p>\n

 <\/p>\n

It was Mr. Lula\u2019s 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.<\/p>\n

 <\/p>\n

\u201cWhen the world becomes unstable and threatening, it\u2019s natural to seek refuge where we feel secure. For Brazil, Mercosur is that place,\u201d President Lula said during the 66th Mercosur Summit. \u201cOver more than three decades, we\u2019ve built a house with solid foundations, capable of withstanding storms. We\u2019ve 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.\u201d<\/p>\n

 <\/p>\n

According to President Lula, the bloc\u2019s Common External Tariff serves as protection against external trade conflicts. \u201cBeing part of Mercosur protects us,\u201d he said, adding that member states must work together to preserve their autonomy in an increasingly polarized global context.<\/p>\n

 <\/p>\n

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\u2019 rights. President Lula said Brazil\u2019s leadership will be a chance to reflect on \u201cthe place we aim to occupy on the new global chessboard.\u201d<\/p>\n

 <\/p>\n

Standing beside Mr. Milei, President Lula renewed his support for deeper economic integration and reducing the bloc\u2019s 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.<\/p>\n

 <\/p>\n

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. \u201cDelaying this task means sacrificing the bloc\u2019s strategic potential in the production of electric vehicles and biofuels,\u201d President Lula said.<\/p>\n

 <\/p>\n

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 \u201cthe dynamic center of the global economy.\u201d<\/p>\n

 <\/p>\n

In contrast, Mr. Milei emphasized that Argentina\u2019s 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 \u201can iron curtain\u201d for its members.<\/p>\n

 <\/p>\n

\u201cWe urgently need more freedom. We\u2019ve left behind decades of stagnation. Mercosur\u2019s partners must decide whether they want to support the path we\u2019ve embarked on. Either we move forward together or alone,\u201d Mr. Milei said. In his view, the bloc should no longer be seen as \u201ca shield that protects us from the world, but a spear that allows us to enter global markets.\u201d<\/p>\n

 <\/p>\n

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 \u201cfight for justice.\u201d<\/p>\n

 <\/p>\n

President Lula said his bond with Ms. Kirchner extends beyond formal relations. \u201cIt\u2019s a friendship rooted in mutual affection, shared political ideals, and a common commitment to social justice and fighting inequality,\u201d he wrote. Ms. Kirchner is currently under house arrest, serving a six-year sentence for corruption.<\/p>\n

 <\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

________________________________________<\/strong><\/p>\n

07\/04\/2025<\/p>\n

 <\/p>\n

SUPREME COURT SUSPENDS IOF DECREES, CALLS CONCILIATION HEARING<\/u><\/strong><\/p>\n

Justice Moraes questions legitimacy of tax hike while urging better dialogue between branches of government<\/em><\/strong><\/p>\n

\u00a0<\/em><\/p>\n

Supreme Federal Court (STF) Justice Alexandre de Moraes on Friday (4) suspended both the executive and legislative decrees related to Brazil\u2019s 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.<\/p>\n

 <\/p>\n

The decision stems from cases filed by the Liberal Party (PL) and Socialism and Freedom Party (PSOL), as well as the Attorney General\u2019s Office (AGU), regarding the legality of the IOF hike. While Mr. Moraes acknowledged the executive branch\u2019s authority to adjust tax rates, he expressed concern over the \u201cnature\u201d of the recent increase.<\/p>\n

 <\/p>\n

\u201cThere 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\u2019s autonomous decrees are driven by a deviation of purpose, they may violate the principle of proportionality,\u201d Mr. Moraes wrote.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

Allies with ministries also filed suit<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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 \u201cCongress acted properly in blocking measures that raised taxes without following the legislative process.\u201d<\/p>\n

 <\/p>\n

Court battle deepens political crisis<\/p>\n

 <\/p>\n

The AGU\u2019s 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\u2019 Party (PT), which included AI-generated videos portraying Congress as \u201cthe enemy of the people.\u201d<\/p>\n

 <\/p>\n

These attacks, part of a broader \u201crich vs. poor\u201d narrative pushed by the government, specifically targeted Chamber Speaker Hugo Motta (Republicans of Para\u00edba). 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.<\/p>\n

 <\/p>\n

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. \u201cEveryone needs to take a step back\u2014the Legislative, Judiciary, and Executive. They need to sit at the table and resolve this without letting tensions get this high,\u201d said Mr. Lira, who previously served as Speaker of the Chamber.<\/p>\n

 <\/p>\n

According to him, both the Executive and Legislative were within their rights in the IOF dispute. \u201cThis will only be resolved through dialogue\u2014and that\u2019s what we\u2019ve been working around the clock to make happen,\u201d he said.<\/p>\n

 <\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

________________________________________<\/strong><\/p>\n

07\/10\/2025<\/p>\n

 <\/p>\n

BRAZIL\u2019S INFLATION EXCEEDS TARGET CEILING FOR FIRST TIME UNDER NEW RULES<\/u><\/strong><\/p>\n

IPCA rose 0.24% in June and 5.35% over 12 months, breaching continuous target system of 4.5%<\/em><\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Brazil\u2019s 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%.<\/p>\n

 <\/p>\n

The June figure came in above the median forecast of 0.19% from 33 financial institutions and consulting firms surveyed by Valor Data, Valor\u2019s financial data provider. Forecasts ranged from 0.11% to 0.26%.<\/p>\n

 <\/p>\n

In the 12 months through June, inflation reached 5.35%, exceeding the upper limit of the Central Bank\u2019s 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.<\/p>\n

 <\/p>\n

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).<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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%.<\/p>\n

 <\/p>\n

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 Goi\u00e2nia, Campo Grande, Rio Branco, S\u00e3o Lu\u00eds, Aracaju, and Bras\u00edlia.<\/p>\n

 <\/p>\n

Price behavior by category<\/p>\n

 <\/p>\n

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).<\/p>\n

 <\/p>\n

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%).<\/p>\n

 <\/p>\n

Diffusion and core inflation<\/p>\n

 <\/p>\n

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%.<\/p>\n

 <\/p>\n

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%.<\/p>\n

 <\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

________________________________________<\/strong><\/p>\n

07\/11\/2025<\/p>\n

 <\/p>\n

TRUMP\u2019S TARIFF THREAT SEEN AS BIGGER RISK FOR INFLATION THAN GROWTH<\/u><\/strong><\/p>\n

Economists warn of secondary effects from currency, trade tensions<\/em><\/strong><\/p>\n

 <\/p>\n

The 50% tariff announced by U.S. President Donald Trump on Brazilian exports is expected to have a limited direct impact on Brazil\u2019s economy, but economists warn that the damage could escalate depending on how negotiations unfold.<\/p>\n

 <\/p>\n

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\u2019s GDP, and the United States, though Brazil\u2019s second-largest buyer, accounts for just 12% of exports.<\/p>\n

 <\/p>\n

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<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

In a report, economists Iana Ferr\u00e3o 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.<\/p>\n

 <\/p>\n

\u201cBecause the price elasticity of Brazil\u2019s 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,\u201d they wrote.<\/p>\n

 <\/p>\n

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\u2014below 0.05 pp in both GDP and exports in 2026\u2014and sees foreign direct investment (FDI) declining by 0.2 pp.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

\u201cTrump\u2019s letter may open the door to negotiations and reduce the final tariff. But we\u2019re skeptical: Trump\u2019s threat is unlikely to influence domestic Brazilian politics,\u201d said Felipe Camargo, global chief economist at Oxford Economics.<\/p>\n

 <\/p>\n

Inflation impact<\/p>\n

 <\/p>\n

The inflation outlook remains more uncertain. Brazil\u2019s 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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

\u201cThere\u2019s talk that beef prices could rise in the second half of the year, but these developments could cancel that out,\u201d said Warren\u2019s inflation strategist, Andr\u00e9a 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.<\/p>\n

 <\/p>\n

Santander shares a similar view. \u201cWe might see some downward pressure in the first two months. After that, it depends on the dollar\u2019s path. If it stays around current levels, our inflation forecast doesn\u2019t change much,\u201d Adriano Vallad\u00e3o 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.<\/p>\n

 <\/p>\n

XP does not expect a meaningful inflation impact if Brazil refrains from retaliation. But escalation could hit Brazil\u2019s import basket, which includes fuel, chemicals, pharmaceuticals, and auto and aerospace components.<\/p>\n

 <\/p>\n

\u201cFor fuels, around 3% of gasoline and 5% of diesel consumed in Brazil come from the U.S. Substitution wouldn\u2019t be easy, but it\u2019s 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.,\u201d the firm said. A 50% Brazilian tariff on these goods could add 0.05 pp to inflation through higher airfare.<\/p>\n

 <\/p>\n

No retreat expected from Trump<\/p>\n

 <\/p>\n

For UBS BB chief economist, Alexandre de \u00c1zara, the 50% tariff on Brazilian products is unlikely to be rolled back. He argued that Mr. Trump\u2019s grievances clash directly with the Brazilian government and judiciary: the legal situation of former president Jair Bolsonaro, Mr. Lula\u2019s 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\u2019s Supreme Court.<\/p>\n

 <\/p>\n

\u201cThe Brazilian government needs to stop escalating first. What we\u2019ve seen so far is that if a country retaliates, Trump always retaliates back,\u201d Mr. \u00c1zara said. He does not believe Mr. Trump will compromise on these issues.<\/p>\n

 <\/p>\n

The greater risk, he warned, lies in further escalation. \u201cFrom an economic standpoint, de-escalation would be wiser. But that doesn\u2019t seem to be the government\u2019s 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\u2019s inputs come from the U.S. And Trump could strike back again.\u201d<\/p>\n

 <\/p>\n

Mr. \u00c1zara does not rule out more drastic U.S. measures, such as restrictions on American investment in Brazil. \u201cThat could be very damaging and could severely impact the exchange rate,\u201d he said.<\/p>\n

 <\/p>\n

Souce: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

________________________________________<\/strong><\/p>\n

07\/11\/2025<\/p>\n

 <\/p>\n

AGRICULTURAL BONDS TO REMAIN TOP RURAL CREDIT SOURCE DESPITE NEW TAX<\/u><\/strong><\/p>\n

Bonds known as LCA expected to exceed R$700bn by 2026 under Crop Plan<\/em><\/strong><\/p>\n

 <\/p>\n

Agribusiness Credit Bnds (LCAs) are set to remain the leading funding instrument for Brazil\u2019s 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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

\u201cThe Finance Ministry\u2019s proposal to impose a 5% tax maintains LCAs\u2019 advantage over other fixed-income instruments while also helping to fund interest rate subsidies in rural credit,\u201d said Mr. Bittencourt.<\/p>\n

 <\/p>\n

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. \u201cWe wanted to avoid raising rates, but the numbers had to add up,\u201d Mr. Bittencourt said during a media briefing after the plan\u2019s release earlier this month. \u201cIn agriculture, the lower the rate, the better. But worse than a slightly higher rate is having no funds at all. That was the government\u2019s main concern.\u201d<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

Looking ahead, Mr. Bittencourt said the \u201cideal scenario\u201d for agricultural policy would be a Selic rate of 8.5%\u2014a 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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

\u201cTaxing one type of instrument sets a precedent. There\u2019s 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,\u201d Mr. Wedekin told Valor.<\/p>\n

 <\/p>\n

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

 <\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

________________________________________<\/strong><\/p>\n

07\/14\/2025<\/p>\n

 <\/p>\n

CHINA EXPANDS IN CONSUMER GOODS, NOW SUPPLIES 26% OF BRAZIL\u2019S IMPORTS<\/u><\/strong><\/p>\n

Cars, electronics and home appliances drive Chinese dominance as U.S. loses share<\/em><\/strong><\/p>\n

 <\/p>\n

Brazil\u2019s 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.<\/p>\n

 <\/p>\n

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%.<\/p>\n

 <\/p>\n

Amid China\u2019s search for new markets under the threat of U.S. President Donald Trump\u2019s tariffs, the country exported $35.7 billion to Brazil in the first six months of this year: 26.3% of Brazil\u2019s total imports, a record high and up 22.2%.<\/p>\n

 <\/p>\n

China became Brazil\u2019s 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.<\/p>\n

 <\/p>\n

Despite the introduction of import tariffs last year\u2014starting at 10% in early 2024 and rising to 18% now\u2014pure electric vehicles from China remain Brazil\u2019s most imported cars.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

Between 2022 and 2025, Brazil rose from China\u2019s 17th to its sixth-largest vehicle export market, now representing 5.6% of the total.<\/p>\n

 <\/p>\n

This trend is mirrored in household appliances. During the second-hottest summer in Brazil\u2019s history\u2014second only to 2024\u2014air 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.<\/p>\n

 <\/p>\n

Imports of Chinese-made vacuum cleaners hit $51 million, up 26% from a year earlier.<\/p>\n

 <\/p>\n

Even when values declined, China remained the leading supplier. Imports of electric stoves, grills, and baking pans totaled $98.2 million\u2014down from $113.7 million in 2024\u2014but Germany, the second-largest supplier, shipped just $2.3 million.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

Chinese government trade data confirms Brazil\u2019s growing importance. Between 2022 and 2025, Brazil climbed from 17th to sixth among China\u2019s TV buyers, and from 19th to sixth in irons. It also rose from 16th to 12th in electric stoves and grills.<\/p>\n

 <\/p>\n

Brazil\u2019s appetite<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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\u2019s Foreign Trade Indicator (Icomex) puts volume growth at 37.2%.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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%.<\/p>\n

 <\/p>\n

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\u2019s second-largest supplier.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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%.<\/p>\n

 <\/p>\n

Since 2006, China\u2019s import volume to Brazil has multiplied by seven, while its average export price rose just 14%.<\/p>\n

 <\/p>\n

Trade surge<\/p>\n

 <\/p>\n

Jos\u00e9 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\u2019s role.<\/p>\n

 <\/p>\n

The import surge had a negative impact on Brazil\u2019s GDP in the first quarter, despite a record grain harvest, said Livio Ribeiro, partner at BRCG and researcher at FGV Ibre. \u201cIt was very unusual. Even with the bumper crop, net trade dragged down GDP, which was unexpected.\u201d<\/p>\n

 <\/p>\n

Data from Brazil\u2019s 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%.<\/p>\n

 <\/p>\n

SECEX figures show that China\u2019s share of Brazilian imports rose from 23.3% in the first half of 2024 to 26.3% in the same period this year.<\/p>\n

 <\/p>\n

Regardless of the direction of Mr. Trump\u2019s tariff policies, Mr. Castro said, China will continue expanding its export markets. \u201cThe world is adapting to this new China, a country that produces everything, competes in everything, and offers competitive prices in everything.\u201d<\/p>\n

 <\/p>\n

Mr. Ribeiro said the future of Chinese imports in Brazil will depend less on the U.S. president\u2019s policies and more on the strength of domestic lobbying efforts. \u201cBrazil\u2019s 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.\u201d<\/p>\n

 <\/p>\n

The global tariff debate, he said, has thrown \u201csome sand in the gears of global trade.\u201d China is also struggling to boost domestic consumption and is seeking new markets for its industrial surplus.<\/p>\n

 <\/p>\n

Chinese carmakers gain ground<\/p>\n

 <\/p>\n

Tulio Cariello, research director at the Brazil-China Business Council, said China\u2019s 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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

New Chinese brands such as GAC, Zeekr, Omoda & Jaecoo, and Leapmotor have followed BYD and GWM into the Brazilian market. \u201cThey realized there\u2019s a market for EVs in Brazil. BYD created a positive image for Chinese cars, which are now almost synonymous with electric vehicles,\u201d Mr. Cariello said.<\/p>\n

 <\/p>\n

Mr. Ribeiro said higher tariffs haven\u2019t significantly curbed demand for Chinese EVs, which tend to be more expensive and less sensitive to price increases. \u201cTariffs reduced margins, but that wasn\u2019t fully passed on to consumers. And even if it were, they\u2019d still be cheaper than German or Swedish models.\u201d<\/p>\n

 <\/p>\n

Chinese dominance extends to appliances and production chains<\/p>\n

 <\/p>\n

In appliances and white goods, Mr. Cariello noted that China\u2019s dominance reflects years of industrial investment. When China opened to foreign investment, many U.S., European, and Japanese firms set up production there. \u201cThe Chinese learned, began making their own products, and started competing with global brands. In some cases, like air conditioners, they\u2019re already ahead.\u201d<\/p>\n

 <\/p>\n

He added that fierce competition among Chinese manufacturers helps keep prices low.<\/p>\n

 <\/p>\n

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\u2019s 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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

\u201cEach case is different, but there\u2019s no doubt China will remain the dominant supplier in many sectors,\u201d he said. \u201cChinese 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.\u201d<\/p>\n

 <\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

________________________________________<\/strong><\/p>\n

07\/15\/2025<\/p>\n

\u00a0<\/u><\/p>\n

PREVI EXITS BRF, REJECTING MARFRIG OFFER<\/u><\/strong><\/p>\n

Pension of Banco do Brasil workers sheds stake after 30 years as investors, citing better price from market<\/em><\/strong><\/p>\n

\u00a0<\/em><\/strong><\/p>\n

One of BRF\u2019s 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.<\/p>\n

 <\/p>\n

Previ had been a shareholder since the 1990s, originally through an investment in Perdig\u00e3o, 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.<\/p>\n

 <\/p>\n

\u201cThe 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,\u201d Previ said in a statement, emphasizing its more than 30-year history with the company.<\/p>\n

 <\/p>\n

\u201cPrevi believes the proposed exchange ratio in the merger does not adequately reflect BRF\u2019s value, potentially leading to losses for minority shareholders and, by extension, for our members. By exiting before the merger\u2019s completion, Previ protects participants\u2019 assets and reaffirms its commitment to technical, well-founded decisions aligned with the best interests of the pension plan,\u201d the statement added.<\/p>\n

 <\/p>\n

Previ\u2019s exit rattled investors, with BRF shares dropping 4.55% on B3.<\/p>\n

 <\/p>\n

The fund\u2019s 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\u2014the latest postponement, granted last Friday, extended the process by another 21 days.<\/p>\n

 <\/p>\n

They are demanding further disclosure of the valuation study underpinning the share price and have also raised concerns about the involvement of Marfrig\u2019s controlling shareholder, Marcos Molina, in the merger vote.<\/p>\n

 <\/p>\n

Meanwhile, Marfrig and Mr. Molina continue to buy up BRF shares. The company disclosed that its combined stake, together with Molina\u2019s 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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

 <\/p>\n

________________________________________<\/strong><\/p>\n

07\/17\/2025<\/p>\n

 <\/p>\n

BRAZIL FACES HURDLES REPLACING RUSSIAN DIESEL SUPPLY<\/u><\/strong><\/p>\n

Russia became top supplier in 2023, offering discounted fuel<\/em><\/strong><\/p>\n

 <\/p>\n

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\u2019s leading diesel source since 2023, offering the fuel at discounted prices amid international trade restrictions.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

From January to June, Russia was Brazil\u2019s top diesel supplier, accounting for $2.5 billion in exports, according to data from Brazil\u2019s Ministry of Development, Industry, and Foreign Trade (MDIC). The United States ranked second, with $1 billion. Currently, domestic production meets 70% of Brazil\u2019s diesel demand, with the remaining 30% filled through imports.<\/p>\n

 <\/p>\n

According to Felipe Perez, an analyst at S&P, Brazil would face difficulties sourcing diesel elsewhere amid already tight global inventories. \u201cIf 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,\u201d 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.<\/p>\n

 <\/p>\n

Russia emerged as a key player in Brazil\u2019s 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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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\u2014well 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.<\/p>\n

 <\/p>\n

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. \u201cThat scenario would shake up the market. The U.S. could be an alternative, but I\u2019m not sure U.S. refineries have the capacity to scale up production enough,\u201d said Mr. Araujo. \u201cIf global supply falls short, prices will surge, adding pressure to inflation.\u201d<\/p>\n

 <\/p>\n

ABICOM members importing Russian diesel are waiting to see if Mr. Trump\u2019s threats materialize. According to an industry source, most Russian diesel buyers in Brazil are independent operators.<\/p>\n

 <\/p>\n

Asked for comment, Acelen, the owner of the Mataripe refinery in Bahia, said it does not purchase Russian diesel. Ra\u00edzen declined to comment, while Vibra did not reply to Valor\u2019s request for comment.<\/p>\n

 <\/p>\n

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. \u201cPetrobras\u2019s 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.\u201d<\/p>\n

 <\/p>\n

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. \u201cI consider the chance of secondary tariffs on Russian buyers remote, given the importance of these markets to the U.S. economy,\u201d 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.<\/p>\n

 <\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

________________________________________<\/strong><\/p>\n

07\/18\/2025<\/p>\n

 <\/p>\n

BRAZIL SETS NEW MONTHLY RECORD FOR BEEF EXPORTS<\/u><\/strong><\/p>\n

The volume of exports in June reached 341,550 tonnes, up 41%<\/em><\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

China remains Brazil\u2019s top customer, importing 631,900 tonnes in the semester\u2014an 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.<\/p>\n

 <\/p>\n

China accounted for 43% of Brazil\u2019s 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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

________________________________________<\/strong><\/p>\n

07\/21\/2025<\/p>\n

 <\/p>\n

PUBLIC DEBT WILL KEEP RISING WITHOUT TOUGH FISCAL REFORM, STUDY WARNS<\/u><\/strong><\/p>\n

MCM 4Intelligence projects debt-to-GDP ratio above 100% in multiple scenarios within 10 years<\/em><\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Brazil\u2019s 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\u2019s economic and fiscal performance over the past 20 years, highlights growing concerns among economists ahead of this year\u2019s elections.<\/p>\n

 <\/p>\n

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\u2019s gross debt currently stands at 76.1% of GDP.<\/p>\n

 <\/p>\n

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%\u2014which the Finance Ministry estimates at over R$800 billion\u2014and trimming parliamentary budget earmarks by 10%, from R$50.4 billion in 2025.<\/p>\n

 <\/p>\n

The study\u2019s 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\u2019s debt challenge within five years \u201cthrough spending controls and fiscal rebuilding.\u201d He acknowledged that returning to primary surpluses at the current Selic interest rate level is \u201cneither viable nor feasible,\u201d but suggested there was room for interest rate cuts \u201csoon.\u201d<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

\u201cThe 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,\u201d said Mr. Teixeira.<\/p>\n

 <\/p>\n

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 In\u00e1cio 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.<\/p>\n

 <\/p>\n

According to MCM\u2019s estimates, such a strict package could generate an average primary surplus of approximately 3% of GDP over ten years. \u201cWith this level of fiscal adjustment, it\u2019s not hard to show the debt could be stabilized,\u201d Mr. Teixeira noted.<\/p>\n

 <\/p>\n

Other institutions have reached similar conclusions. A recent World Bank study estimated the effort needed to stabilize Brazil\u2019s debt trajectory at 3% of GDP. The Independent Fiscal Institution (IFI) calculated the required primary surplus at 2.4%.<\/p>\n

 <\/p>\n

A tougher fiscal adjustment could lead to a 3% primary surplus within a decade, MCM says<\/p>\n

 <\/p>\n

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%\u2014the same level recorded between 2016 and 2019 after the approval of Brazil\u2019s spending cap\u2014and reducing interest rate volatility by halving its standard deviation.<\/p>\n

 <\/p>\n

In this case, the probability of debt exceeding 100% of GDP virtually disappears. \u201cThe key takeaway is that investors need to view the reform as sufficient. For any reform to be effective, it must clearly signal debt stabilization,\u201d Mr. Teixeira said. \u201cA reform that is too lenient may not achieve this goal.\u201d<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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 \u201cadverse scenario\u201d involving a 100 basis point Selic rate shock starting in September 2025.<\/p>\n

 <\/p>\n

The Finance Ministry, through its press office, said Mr. Durigan\u2019s comments reflect the baseline scenario prepared by the National Treasury\u2019s 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\u2019s latest Fiscal Projections Report, which forecasts a debt peak of 84.3% of GDP in 2028.<\/p>\n

 <\/p>\n

The ministry added that its projections \u201crely on parameters consistent with current macroeconomic conditions and reaffirm the economic team\u2019s commitment to gradual, responsible, and sustainable fiscal consolidation.\u201d<\/p>\n

 <\/p>\n

A recent report by Warren Investimentos did not assign probabilities but outlined three potential scenarios. Not even the baseline scenario\u2014which includes indexing the minimum wage to inflation from 2027 and freezing public sector wages until 2030\u2014was able to stabilize debt by 2035. Only in the \u201cadjustment scenario\u201d 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.<\/p>\n

 <\/p>\n

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%.<\/p>\n

 <\/p>\n

Source: Valr International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

________________________________________<\/strong><\/p>\n

07\/21\/2025<\/p>\n

 <\/p>\n

VIVARA TO ELECT NEW CHAIR AS FOUNDER STEPS DOWN FOR HEALTH REASONS<\/u><\/strong><\/p>\n

Marina Kaufman Bueno Neto to take over as board chair at jewelry retailer<\/em><\/strong><\/p>\n

 <\/p>\n

Vivara, Brazil\u2019s 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\u2019 agreement.<\/p>\n

 <\/p>\n

Paulo Kruglensky, Mr. Kaufman\u2019s nephew, was named vice chair. A former CEO who led one of the company\u2019s most significant growth periods, Mr. Kruglensky spent 17 years at Vivara before stepping down in 2024. His departure followed Mr. Kaufman\u2019s controversial decision to retake the helm of the company.<\/p>\n

 <\/p>\n

Mr. Kaufman submitted his resignation on Friday, and the changes will be formally approved at an extraordinary shareholders\u2019 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.<\/p>\n

 <\/p>\n

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

 <\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

 <\/p>\n

________________________________________<\/strong><\/p>\n

 <\/p>\n

07\/22\/2025<\/p>\n

\u00a0<\/u><\/strong><\/p>\n

U.S. COMPANIES TAKE LEGAL ACTION AGAINST TRUMP OVER \u2018BRAZIL TARIFF\u2019<\/u><\/strong><\/p>\n

Two orange juice importers argue the tariff on Brazil will slash profits and drive up retail prices<\/em><\/strong><\/p>\n

 <\/p>\n

Two U.S. importers have taken the first step in challenging Donald Trump\u2019s proposed sanctions against Brazil, laying out arguments that could pave the way for similar actions by other companies and intensify pressure on Washington.<\/p>\n

 <\/p>\n

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\u2019s threat to impose 50% tariffs on Brazilian goods.<\/p>\n

 <\/p>\n

Based in Flemington, New Jersey, the plaintiffs are premium food manufacturers, producers, and distributors of fruit juices, beverages, and yogurts.<\/p>\n

 <\/p>\n

In the lawsuit, the companies argue that the proposed tariffs\u2014set to take effect on August 1\u2014exceed the president\u2019s authority under the International Emergency Economic Powers Act and constitute an unconstitutional delegation of power.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

\u201cBrazil\u2019s tariff will result in a significant, and perhaps prohibitive, price increase on a staple of the American breakfast,\u201d the importers warn.<\/p>\n

 <\/p>\n

The filing also challenges the rationale behind Mr. Trump\u2019s proposed tariff, citing his reference to \u201cthe way Brazil treated former President Bolsonaro,\u201d \u201cBrazil\u2019s insidious attacks on free elections and the fundamental rights of Americans to freedom of expression,\u201d and \u201cthe long-standing and very unfair trade relationship.\u201d<\/p>\n

 <\/p>\n

The suit notes that Mr. Trump\u2019s letter does not cite any legal or statutory basis for imposing a 50% tariff against Brazil. It asserts that the letter \u201cdoes 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.\u201d<\/p>\n

 <\/p>\n

Moreover, the document points out that Mr. Trump \u201chas 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.,\u201d nor has he \u201cdeclared a national emergency as the basis for imposing the Brazil Tariff.\u201d<\/p>\n

 <\/p>\n

The two importers claim that Mr. Trump\u2019s imposition of a 50%\u2014or higher\u2014tariff on Brazilian orange juice will cause substantial and immediate financial harm to both their companies and American consumers.<\/p>\n

 <\/p>\n

Brazil is the world\u2019s 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.<\/p>\n

 <\/p>\n

\u201cThe 50% tariff imposed on Brazil by the Trump administration will significantly affect the petitioners\u2019 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\u2019 30-year history,\u201d the importers state in their complaint.<\/p>\n

 <\/p>\n

They argue that the imposition of the tariffs undermines their ability to plan, fulfill production requirements, and manage cash flow, \u201cas the additional costs impose an immediate and uncontrollable financial burden that our current profit margins cannot absorb.\u201d<\/p>\n

 <\/p>\n

Without \u201crelief from these tariffs,\u201d 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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

The filing also highlights the steep decline in domestic orange juice production\u2014particularly in Florida\u2014which 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.<\/p>\n

 <\/p>\n

According to the plaintiffs, Florida\u2019s 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.<\/p>\n

 <\/p>\n

In conclusion, the companies assert that the imposition of the Brazil Tariff\u2014particularly the 50% rate\u2014is unlawful and urge the court to bar the Trump administration from enforcing the measure.<\/p>\n

 <\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

________________________________________<\/strong><\/p>\n

07\/22\/2025<\/p>\n

 <\/p>\n

GOL AND AZUL ARGUE CODESHARE DEAL BEFORE CADE<\/u><\/strong><\/p>\n

Antitrust agency flagged deal after airlines announced merger talks<\/em><\/strong><\/p>\n

 <\/p>\n

Gol and Azul have denied before Brazil\u2019s Administrative Council for Economic Defense (CADE) that their codeshare agreement constitutes an \u201cassociative contract\u201d 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.<\/p>\n

 <\/p>\n

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\u2019s 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 \u201cassociative contract\u201d between rivals. Although the SG archived the case, the CADE Tribunal later reopened it. If CADE\u2019s commissioners find that the agreement was improperly executed without prior notification, the airlines could face fines.<\/p>\n

 <\/p>\n

One of the commissioner\u2019s main questions was whether Gol or Azul had discontinued any overlapping routes after the codeshare agreement took effect.<\/p>\n

 <\/p>\n

Gol responded that changes in flight networks\u2014including frequencies, connections, and schedules\u2014are 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\u2019s civil aviation regulator (ANAC), two regular overlapping routes were discontinued. However, Gol did not specify which routes.<\/p>\n

 <\/p>\n

Gol further argued that labeling the codeshare as an associative contract is \u201cbased on incorrect premises and is fundamentally flawed.\u201d<\/p>\n

 <\/p>\n

\u201cIt is impossible to equate the codeshare agreement with precedents involving actual infrastructure sharing,\u201d the airline said. Gol maintained that the SG\u2019s 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.<\/p>\n

 <\/p>\n

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

 <\/p>\n

Azul also stated that since the codeshare\u2019s 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.<\/p>\n

 <\/p>\n

Furthermore, Azul argued that the agreement does not include joint pricing arrangements. \u201cThe parties do not exchange any pricing or operational information that could lead to any coordination between their activities,\u201d the company said.<\/p>\n

 <\/p>\n

Eric Hadmann Jasper, an attorney and professor of economic law, said it is \u201cnatural\u201d for Gol and Azul to frame their codeshare agreement within precedents that do not treat such arrangements as associative contracts.<\/p>\n

 <\/p>\n

He added that CADE could, in principle, fine the airlines. \u201cHowever, 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,\u201d Mr. Jasper noted.<\/p>\n

 <\/p>\n

In a recent interview with Valor, CADE President Gustavo Augusto pointed to the codeshare agreement as one of the Tribunal\u2019s top cases for the second half of the year.<\/p>\n

 <\/p>\n

\u201cI 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\u2019s decision, it could also influence the direction of the proposed merger,\u201d he said.<\/p>\n

 <\/p>\n

Gol declined to comment, and Azul did not immediately respond to requests for comment.<\/p>\n

 <\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

________________________________________<\/strong><\/p>\n

07\/15\/2025<\/p>\n

\u00a0<\/strong><\/p>\n

PREVI EXITS BRF, REJECTING MARFRIG OFFER<\/a><\/strong><\/p>\n

Pension of Banco do Brasil workers sheds stake after 30 years as investors, citing better price from market<\/em><\/strong><\/p>\n

 <\/p>\n

One of BRF\u2019s 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.<\/p>\n

 <\/p>\n

Previ had been a shareholder since the 1990s, originally through an investment in Perdig\u00e3o, 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.<\/p>\n

 <\/p>\n

\u201cThe 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,\u201d Previ said in a statement, emphasizing its more than 30-year history with the company.<\/p>\n

 <\/p>\n

\u201cPrevi believes the proposed exchange ratio in the merger does not adequately reflect BRF\u2019s value, potentially leading to losses for minority shareholders and, by extension, for our members. By exiting before the merger\u2019s completion, Previ protects participants\u2019 assets and reaffirms its commitment to technical, well-founded decisions aligned with the best interests of the pension plan,\u201d the statement added.<\/p>\n

 <\/p>\n

Previ\u2019s exit rattled investors, with BRF shares dropping 4.55% on B3.<\/p>\n

 <\/p>\n

The fund\u2019s 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\u2014the latest postponement, granted last Friday, extended the process by another 21 days.<\/p>\n

 <\/p>\n

They are demanding further disclosure of the valuation study underpinning the share price and have also raised concerns about the involvement of Marfrig\u2019s controlling shareholder, Marcos Molina, in the merger vote.<\/p>\n

 <\/p>\n

Meanwhile, Marfrig and Mr. Molina continue to buy up BRF shares. The company disclosed that its combined stake, together with Molina\u2019s 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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

_______________________________________<\/strong><\/p>\n

07\/25\/2025<\/p>\n

 <\/p>\n

U.S. EYES BRAZIL\u2019S RARE EARTHS AS LULA GOVERNMENT PUSHES FOR TALKS<\/u><\/strong><\/p>\n

Finance Minister Fernando Haddad signals credit line to support Brazilian companies hit by potential U.S. tariffs<\/em><\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

With the United States showing interest in Brazil\u2019s 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.<\/p>\n

 <\/p>\n

Finance Minister Fernando Haddad publicly reinforced the government\u2019s 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.<\/p>\n

 <\/p>\n

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\u2014relying on backchannel communications through political and business intermediaries to appeal to Mr. Trump\u2014but has received little response from the White House.<\/p>\n

 <\/p>\n

In light of the situation, the government is preparing a support package for affected Brazilian firms. Minister Haddad said a \u201cmenu of measures\u201d 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.<\/p>\n

 <\/p>\n

\u201cThis is a political decision that necessarily rests with him, given the sensitivity and importance of the issue,\u201d 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 \u201cpermitted under international law.\u201d<\/p>\n

 <\/p>\n

On the investigations by U.S. authorities into Brazil\u2019s Pix instant payment system, Mr. Haddad suggested the U.S. may be motivated by profit.<\/p>\n

 <\/p>\n

\u201cPix is now being accepted in Europe, in the U.S., in Argentina, at no cost to those countries. Who is that hurting? It\u2019s hurting those who profit from financial transactions,\u201d he said.<\/p>\n

 <\/p>\n

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\u2019t happened.<\/p>\n

 <\/p>\n

President Lula said he is good at \u201cplaying cards\u201d and warned that if Mr. Trump is bluffing, he\u2019s ready to call it and double the challenge. \u201cBrazil is used to negotiating,\u201d he added during an event in Minas Gerais.<\/p>\n

 <\/p>\n

President Lula also demanded respect from the U.S. government and challenged Mr. Trump to explain \u201cwhat his problem is\u201d with Brazil, while warning that retaliation is on the table. \u201cIf the United States wants to negotiate, Lula is ready to negotiate. But I only take disrespect from Dona Lindu,\u201d he added, referring to his late mother. He implied that American discomfort may stem from Brazil\u2019s regulation of social media and the success of Pix.<\/p>\n

 <\/p>\n

Race for strategic minerals<\/p>\n

 <\/p>\n

In his speech, Mr. Lula also mentioned U.S. interest in Brazil\u2019s strategic mineral resources.<\/p>\n

 <\/p>\n

\u201cWe have 12% of the world\u2019s 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,\u201d he said.<\/p>\n

 <\/p>\n

The remark was a response to reports that the U.S. charg\u00e9 d\u2019affaires in Bras\u00edlia 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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

Vice President Geraldo Alckmin, who also serves as Minister of Development, Industry, Trade, and Services, said there is \u201ca very long agenda to explore and advance\u201d in ongoing talks with the U.S. when asked specifically about American interest in critical minerals.<\/p>\n

 <\/p>\n

\u201cThere are countless areas,\u201d he said, referring to discussions he has had in recent days with representatives from several sectors, including mining.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

________________________________________<\/strong><\/p>\n

07\/25\/2025<\/p>\n

 <\/p>\n

CORN ETHANOL PRODUCER FS RESUMES EXPANSION WITH R$2BN INVESTMENT<\/u><\/strong><\/p>\n

Company to build new plant in Mato Grosso following financial recovery<\/em><\/strong><\/p>\n

\u00a0<\/em><\/p>\n

FS, Brazil\u2019s 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.<\/p>\n

 <\/p>\n

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\u2019s 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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

In a statement, CEO Rafael Abud said the decision to invest in Campo Novo do Parecis was \u201creinforced by the approval of the Future Fuel project, which paved the way for E30 and soon E35.\u201d Starting August 1, Brazil will increase the mandatory blend of anhydrous ethanol in gasoline from 27% to 30%.<\/p>\n

 <\/p>\n

Despite the operational improvements, FS still lacks access to lower-cost credit lines. In its latest rating review on July 1, Moody\u2019s reaffirmed the company\u2019s \u201cAA-.br\u201d rating on the national scale and \u201cBa3\u201d globally, but with a negative outlook, citing persistent inflation and high interest rates in Brazil.<\/p>\n

 <\/p>\n

Moody\u2019s noted that while FS has reduced its leverage, the company\u2019s 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\u2019s interest coverage ratio (EBIT to interest expenses) was 1.7 times\u2014typically considered insufficient, as the market expects this metric to exceed 2.0 times for financial comfort.<\/p>\n

 <\/p>\n

The new investment will raise FS\u2019s 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.<\/p>\n

 <\/p>\n

The company\u2019s growth plan also includes a fifth plant in Quer\u00eancia (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.<\/p>\n

 <\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

________________________________________<\/strong><\/p>\n

07\/25\/2025<\/p>\n

 <\/p>\n

BRAZIL NEARS INTERNET UNIVERSALIZATION<\/u><\/strong><\/p>\n

Streaming services reach 25% of households in 2024, banking access is growing with use of Pix, and almost every household has cell phones<\/em><\/strong><\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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\u2019 access to technological services and devices.<\/p>\n

 <\/p>\n

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\u2014compared with 92.5% in 2023.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

Among the reasons for accessing the internet, mapped by IBGE, \u201caccessing banks and other financial institutions\u201d was the one that showed the greatest growth between 2023 and 2024. \u201cMore and more people are using banks through mobile apps, for example,\u201d commented Leonardo Quesada, an IBGE researcher.<\/p>\n

 <\/p>\n

Asked if the result could also have been impacted by increased use of Pix, the expert agreed that \u201cit\u2019s a reasonable hypothesis.\u201d<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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%).<\/p>\n

 <\/p>\n

Streaming gains<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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%).<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

\u201cWe see that where [tech] equipment is available, the average income is much higher,\u201d Mr. Quesada said. \u201cIncome 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,\u201d he noted.<\/p>\n

 <\/p>\n

In the IBGE survey, the main reason for not having a cell phone among public school students\u2014that is, among students who don\u2019t pay tuition, and mostly come from lower income households\u2014was 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%).<\/p>\n

 <\/p>\n

In the results on lack of a phone and other services provided by tech devices, IBGE researchers also noted regional disparities.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

________________________________________<\/strong><\/p>\n

07\/28\/2025<\/p>\n

 <\/p>\n

RECIPROCAL U.S. TRADE RETALIATION WOULD SHRINK BRAZIL\u2019S GDP<\/u><\/strong><\/p>\n

Study suggests opening to other markets would soften the blow<\/em><\/strong><\/p>\n

 <\/p>\n

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 Andr\u00e9 Val\u00e9rio, head of macroeconomic research at Inter bank, and his assistant Gustavo Menezes.<\/p>\n

 <\/p>\n

In a previous analysis, Inter\u2019s chief economist, Rafaela Vit\u00f3ria, found that the impact of the proposed U.S. tariffs on the Brazilian economy would be relatively small, due to the country\u2019s 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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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\u2014imposing a 50% tariff on U.S. imports\u2014would also hurt Brazil, the economists said.<\/p>\n

 <\/p>\n

\u201cTaxing these imports could trigger a ripple effect across multiple sectors, particularly in manufacturing, which heavily depends on intermediate inputs,\u201d wrote Mr. Val\u00e9rio and Mr. Menezes in their study.<\/p>\n

 <\/p>\n

Smaller GDP<\/p>\n

 <\/p>\n

Their general equilibrium model estimates that a proportional retaliation would reduce Brazil\u2019s GDP by 0.17 percentage point, on top of the damage from the U.S. tariffs themselves.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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. \u201cIronically, the domestic coal sector\u2014the one most protected by the tariff\u2014would 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,\u201d wrote Mr. Val\u00e9rio and Mr. Menezes.<\/p>\n

 <\/p>\n

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\u2014even if not mostly sourced from the U.S.\u2014lack local substitutes.<\/p>\n

 <\/p>\n

\u201cThis analysis suggests retaliation would not be a beneficial strategy for Brazil, as it would deepen distortions in the economy,\u201d the economists said.<\/p>\n

 <\/p>\n

Redirection of imports<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

For instance, a 10-point across-the-board tariff cut on imports from other countries could raise Brazil\u2019s GDP by 0.12 point, benefiting 57 of the 66 sectors analyzed.<\/p>\n

 <\/p>\n

\u201cPetroleum 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,\u201d the economists wrote.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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\u2014\u201creflecting differences in Brazil\u2019s import profile from the U.S. versus other countries,\u201d Mr. Val\u00e9rio and Mr. Menezes said.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

\u201cThese simulations show how distortive tariffs can be and suggest that a more beneficial response would be to further open the economy to international trade,\u201d the authors concluded.<\/p>\n

 <\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

 <\/p>\n

________________________________________<\/strong><\/p>\n

07\/29\/2025<\/p>\n

\u00a0<\/strong><\/p>\n

FINEP EXPANDS SUPPORT FOR CRITICAL MINERALS PROJECTS<\/a><\/strong><\/p>\n

Brazilian Studies and Projects Financing Agency has contracted 171 strategic minerals projects totaling R$1.4bn since 2019<\/em><\/strong><\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

\u201cFinep 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,\u201d said Finep president Luiz Elias.<\/p>\n

 <\/p>\n

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\u2019s third term, called NIB, and the new national mining policy, which is in the final stages of development by the federal government.<\/p>\n

 <\/p>\n

In the first half of this year, Finep contracted ten projects focused on critical minerals, totaling R$83 million.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

\u201cWe 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,\u201d said Newton Hamatsu, Finep\u2019s superintendent of energy transition and infrastructure.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

\u201cThe 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,\u201d explained Elias Ramos, Finep\u2019s director of innovation.<\/p>\n

 <\/p>\n

Finep downplays the impact of trade negotiations with the U.S. on investments in Brazil but emphasizes the need to continue developing the sector. \u201cIt 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,\u201d said Mr. Hamatsu.<\/p>\n

 <\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

 <\/p>\n

_______________________________________<\/strong><\/p>\n

07\/30\/2025<\/p>\n

\u00a0<\/strong><\/p>\n

BRAZILIAN COFFEE MAY BE SPARED U.S. TARIFFS UNDER NEW TRADE DEALS<\/u><\/strong><\/p>\n

Commerce Secretary Howard Lutnick also mentioned pineapple, cocoa, and mango as products that could qualify for exemption<\/em><\/strong><\/p>\n

 <\/p>\n

U.S. Commerce Secretary Howard Lutnick said on Tuesday (29) that imports of non\u2011U.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.<\/p>\n

 <\/p>\n

In an interview on CNBC\u2019s Squawk Box, Mr. Lutnick said: \u201cIf you grow something and we don\u2019t 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.\u201d<\/p>\n

 <\/p>\n

Of the four products mentioned by the U.S. official\u2014coffee, cocoa, mango, and pineapple\u2014coffee 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%.<\/p>\n

 <\/p>\n

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\u2019s total coffee exports was the second lowest in the past ten years, above only the 15% seen in 2023.<\/p>\n

 <\/p>\n

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).<\/p>\n

 <\/p>\n

According to a source in the coffee export industry, there is still a great deal of uncertainty. And while Mr. Lutnick\u2019s 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.<\/p>\n

 <\/p>\n

Another product where Brazil plays a relevant role in sales to the U.S. is mango, which accounts for about 12% of American imports\u2014making Brazil the fourth-largest supplier\u2014although 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.<\/p>\n

 <\/p>\n

Brazil did not rank among the top 25 suppliers of cocoa beans or fresh pineapple to the U.S. last year.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

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: \u201cBut for the rest of the world, we\u2019re going to have things done by Friday. August 1 is the date that we\u2019re setting all these rates.\u201d<\/p>\n

 <\/p>\n

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 \u201cunfair trade practices\u201d by Brazil and a supposed \u201cwitch hunt\u201d against former President Jair Bolsonaro, who is on trial before the Supreme Federal Court for attempting a coup d\u2019\u00e9tat.<\/p>\n

 <\/p>\n

The tone of Mr. Trump\u2019s communication surprised Brazilian officials. Diplomatic officials noted that the president explicitly mixed political issues involving Mr. Bolsonaro with technical matters of bilateral trade\u2014a move considered unprecedented in the 200-year history of relations between the two countries.<\/p>\n

 <\/p>\n

Last week, Mr. Trump said some countries received 50% tariffs because they had not \u201cgotten along well\u201d 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.<\/p>\n

 <\/p>\n

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.<\/p>\n

 <\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com<\/a><\/p>\n

_______________________________________<\/strong><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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