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Key Points

Brazilian industry is sounding alarms about new US tariffs impacting their economy. The National Confederation of Industry reports export expectations have fallen below the contraction threshold for the first time in months. Employment indicators are also declining as businesses become hesitant to invest and hire. The trade tensions have escalated with both Presidents Lula and Trump exchanging strong words about their trading relationship.

Key Points: Brazil Industry Warns US Tariffs Threaten Exports and Investment

  • Brazil's industrial export expectations drop to 46.6 points signaling contraction
  • US 50% tariffs on Brazilian products took effect August 6
  • Employment index falls to 49.3 points with no job growth expected
  • Investment intention index hits lowest level since October 2023
2 min read

Brazilian industry warns US tariffs could slow exports, investment

Brazilian industry group CNI reports US tariffs causing export contraction fears, falling employment, and reduced investment intentions amid trade tensions.

"The worsening of export expectations is closely related to uncertainties in the external environment, mainly due to the new US trade policy - Isabella Bianchi, CNI"

Brasilia, Aug 21

US-imposed tariffs on Brazilian products could cause a drop in the country's exports for the first time in 21 months, while also negatively impacting investment and employment, the National Confederation of Industry (CNI) warned in a report.

According to the CNI's latest survey on Wednesday, export expectations for Brazil's industrial sector for the next six months fell 5.1 points to 46.6 points in August. When the indicator falls below 50 points, it indicates an expected contraction in exports, Xinhua News Agency reported.

"The worsening of export expectations is closely related to uncertainties in the external environment, mainly due to the new US trade policy," said Isabella Bianchi, CNI's policy and industry analyst.

A 50 percent tariff imposed by the US government on a number of Brazilian products took effect on August 6.

According to the CNI, the measure is already having an impact on industrial employment, which declined in July despite a rise in production growth.

The employment expectations index dropped to 49.3 points in August, signalling that employers do not anticipate job growth in the next six months.

Business owners are less inclined to invest. "The investment intention index fell to 54.6 points, the lowest level since October 2023. However, it remains 2.1 points above the historical average of 52.5 points," the report noted.

Earlier on August 14, Brazilian President Luiz Inacio Lula da Silva said Brazil will not bow down to the United States, countering the claim by his US counterpart Donald Trump that Brazil is "a horrible trading partner."

"It is a lie when the US President says that Brazil is a bad trading partner. Brazil is good, it just won't bow down to the US government," Lula said during an event in the northeast state of Pernambuco.

Earlier, Trump said Brazil is a "horrible trading partner," calling the trial against former Brazilian President Jair Bolsonaro a "political execution."

Lula said that "democracy is judging Bolsonaro."

- IANS

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Reader Comments

P
Priya S
As an Indian exporter, I can relate to Brazil's situation. Trade wars between big economies always hurt smaller players the most. We need more stable international trade policies.
A
Aditya G
Lula is right to stand firm. No country should bow down to bullying tactics. This is why India also needs to diversify its trade partnerships and not depend too much on any single market.
S
Sarah B
The employment impact is what worries me most. When exports drop, ordinary workers suffer. Hope Brazil finds alternative markets quickly. Their agricultural products are excellent quality.
Karthik V
While I support Brazil's stance, both sides need to be careful. Trade wars benefit no one in the long run. Maybe BRICS nations should strengthen trade among themselves as an alternative.
M
Michael C
The timing is bad with global economic recovery still fragile. Countries should be cooperating on trade, not creating new barriers. This affects consumer prices everywhere.

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