Brazil’s Finance Minister Fernando Haddad said on Monday that negotiations with the United States are ongoing, but it is unlikely that any new trade deal will be in place before possible 50% tariffs take effect on August 1.
In a radio interview with CBN, Haddad said Brazil was ready for further negotiations, but that it was possible they might not succeed because Washington has not responded to trade offers initially presented in May.
The duties, announced earlier in July by former President Donald Trump, target a wide range of Brazilian products and coincide with political tensions surrounding the prosecution of former Brazilian President Jair Bolsonaro, who is currently on trial for allegedly organising a coup.
Trump has accused Brazil of unfair trade tactics and referred to the legal case against Bolsonaro as a “witch hunt.”
Contingency planning and market diversification
In response to the rising pressure, Haddad unveiled Brazil’s contingency plan, which includes redirecting more than half of its current exports to the United States to alternative markets.
He admitted, however, that such a change would take time and necessitate complicated logistical modifications.
The United States is one of Brazil’s most important trading partners, particularly in vital commodities including oil, steel goods, coffee, aeroplanes, and orange juice.
While Brazil relies largely on the US market for many of its goods, it currently has a trade imbalance with the US.
Brazilian officials have used this disparity to argue that the proposed levies are both unfair and unwarranted.
Industry impact and domestic support measures
If implemented, the tariffs will strike the hardest among industries with large exposure to the US.
This hits Embraer, an aerospace manufacturer with exposure to the US.
It would also incur heavy losses in other export-heavy sectors like agriculture, energy, and steel.
Haddad maintained that any government assistance for the worst-hit sectors would not have to result in higher primary spending, but suggested that the measures could include, in some cases, support for the worst-hit industries.
The government is now considering how to minimise the economic damage without risking fiscal stability.
No retaliation against US companies
While President Luiz Inácio Lula da Silva has promised to reply in kind if tariffs are imposed, Haddad has taken a more measured approach.
The finance minister made it plain that Brazil would not retaliate against American companies operating within its borders, describing such actions as unfair and unhelpful.
“We cannot pay back in kind something that we consider unfair,” Haddad said, reaffirming Brazil’s determination to maintain a constructive posture even as discussions dangle in the air.
Deadline nears as uncertainty lingers
There is now just under two weeks until the August 1 deadline, and the time to find a fix has nearly run out.
Brazil is still waiting for an official response from Washington, though progress seems slow.
That suggests that while diplomatic channels remain open, Brasília is positioning itself for the likely event of no deal in the necessary time frame.
With tariffs now seemingly a threat instead of just talk, the Brazilian government is walking a fine line, engaging diplomatically but also doing its homework on the economic front as it tries to insulate key industries from a potential trade shock of significant proportions.
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