Brazil and the US are making progress in negotiations on tariffs.

Brazil and the United States took concrete steps in negotiations on trade tariffs, with a high-level meeting held this week between Foreign Minister Mauro Vieira and US Secretary of State Marco Rubio in Niagara Falls, Canada, on the sidelines of the G7 summit. The meeting marks progress in talks aimed at easing trade tensions between the two countries, especially after the announcement of new surcharges on Brazilian products.

Formal proposal and increased support.

The Brazilian government sent a formal proposal to the US on November 4th, following a virtual meeting between the technical teams of both countries. The objective is to prevent the indirect export of Brazilian products to the US via other countries, as highlighted by economist Kevin Hassett of the American government. Simultaneously, Brazil expanded access for companies to the Sovereign Brazil Plan, a program to support sectors affected by tariffs, reducing participation requirements.

Economic and sectoral impacts

The new tariffs directly impacted sectors such as coffee, which registered a sharp drop in sales to the US. According to Folha de S.Paulo, American consumers are already adapting to the absence of Brazilian products, which could put pressure on exports and revenue. The Brazilian government, however, sees a chance to regain market share in the US with possible tariff relief, mentioned by Trump in recent statements.

Market reactions

Investors are closely monitoring the unfolding negotiations. The Ibovespa index rose 0.77% in the last session, closing above 155,000 points, driven by shares of oil companies, mining companies, and banks. The commercial dollar fell to R$ 5.307, down 0.55% on the day. The market awaits the minutes of the Copom meeting and the release of October's inflation figures to assess the pace of Selic rate cuts, which could be brought forward to January if inflation comes in below expectations.

Projections and next steps

Economists point out that resolving the tariffs could open up space for growth in Brazilian exports and stimulate industrial production. The services sector, in turn, has been driving GDP growth projections for the third quarter. The next agenda includes the release of the September Monthly Trade Survey, with expected growth of 0.31% in the restricted concept and 0.11% in the expanded concept.

Photo by Douglas Lopez on Unsplash