Economists believe that Trump’s tariffs on other countries will not have an immediate impact on Brazil. However, they caution that the broader repercussions such as U.S. stagflation, inflation, and currency strength may adversely affect Brazil’s economy in the long term. The investigation into tariffs on wood products poses a potential threat to Brazilian exporters’ competitiveness in the U.S. market, further complicating Brazil’s economic landscape.
Economists agree that Donald Trump’s tariffs on China, Canada, and Mexico may affect Brazil’s trade in the long term, but not immediately. They are more concerned about the recessionary effects on the U.S. economy due to high inflation, weak growth, and increased interest rates. This situation is exacerbated by a stronger dollar, making it harder for Brazil’s Central Bank to combat domestic inflation.
Sergio Vale, chief economist at MB Associados, stated that Trump’s tariffs could push the U.S. towards stagflation. He emphasized that global repercussions would likely impact other economies, predicting a potential U.S. GDP decline exceeding one percentage point as trade tensions escalate. Vale suggested that the continued tariff policies could lead to slower global growth or even a recession.
Vale noted that Brazil faces additional challenges due to currency depreciation and pre-existing high interest rates, which could lead to stagflation in the country. The recent U.S. measures only worsen Brazil’s economic outlook, further complicating its position against the backdrop of rising international tensions.
Nicola Tingas, chief economist at ACREFI, observed that while Brazil might not feel immediate effects from Trump’s trade war, the situation remains fluid. The long-term effects will depend on how other nations respond. Countries like Brazil, maintaining balanced relations with the U.S., may face slower impacts but could still experience negative ramifications as the trade dispute unfolds.
Brazil is increasingly affected by U.S. interest rates and currency strength. Given the contradicting market forces at play, the best strategy for Brazil is to fortify its domestic economy. This preparedness is vital in case global economic conditions worsen significantly.
In response to evolving trade relations, the Brazilian government is awaiting a crucial discussion between Vice President Geraldo Alckmin and U.S. Commerce Secretary Howard Lutnick. While a scheduled call did not occur, it is anticipated to take place soon, influencing Brazil’s approach to the unfolding trade conflict.
Brazilian exporters are particularly concerned about a recent U.S. executive order for an investigation that could impose higher tariffs on wood products. Livio Ribeiro of BRCG noted that the rationale centers around national security, with claims of sufficient domestic supply. If implemented, these tariffs could significantly impact Brazil’s competitive edge in the U.S. market.
The U.S. wood and furniture industries are crucial markets for Brazil, with potential tariffs drastically affecting export opportunities. Welber Barral stated that new barriers could result in additional tariffs or quotas, complicating Brazilian products’ competitiveness and market share in the U.S.
The investigation regarding wood products may take up to 270 days to conclude. Vale warned that under Trump’s aggressive policy approach, it is probable that tariffs will increase, making it difficult for Brazilian exporters to identify alternative markets amid a globally slowing economy.
In summary, while Trump’s tariffs may not immediately impact Brazil, the broader economic effects could threaten its growth. Economists express concern over the potential for stagflation within Brazil and highlight the importance of strengthening the domestic economy against the backdrop of an evolving trade landscape. As trade disputes escalate, the ensuing investigations and potential tariffs on specific exports could further complicate Brazil’s economic positioning.
Original Source: valorinternational.globo.com
