Brazil prepares emergency measures for leading export sectors in wake of possible trade deal failure

Brazil’s Finance Minister Fernando Hadad admitted on Monday that trade negotiations between his country and America could fail to be resolved before an Aug. 1 deadline. That is when President Donald Trump’s administration intends to impose 50% tariffs on various Brazilian exports.

“That can happen,” Haddad said in an interview with local radio station CBN. But he said the giant of South America is still waiting for an official response from Washington to a package of trade proposals that the government presented in May. 

President Trump announced the tariffs earlier this month, saying they were in response to what he described as political persecution of former President Bolsonaro, who is currently on trial for conspiracy to commit a coup. Trump also criticized the country for what he described as “unfair” trade practices.

Not only was the announcement a bolt from the blue, but the trade relationship has been relatively stable. The United States has long been an important export market, particularly for commodities like crude oil, semi-finished steel, coffee, orange juice, and airplanes. Still, the US holds a trade surplus with Brazil, which Brazilian officials have argued makes the new tariffs politically motivated and economically unjustified.

Brazil prepares emergency measures for leading export sectors

Haddad said the giant of South America had contingency plans if Washington imposed the tariffs. One of those plans is to expand export markets and lessen reliance on US trade.

The minister said that if we can find other buyers, we could export more than half of our current exports. “But that would take time.”

Industries across the state are preparing for impact. Among the most at risk is Embraer, the world’s third-largest commercial aircraft manufacturer, which depends heavily on America for sales and partnerships. The steel industry, which sells raw and semi-processed materials to American buyers, would also see major disruption.

Haddad said that although government support could be extended to some industries most affected by the tariffs, the efforts would remain fiscally prudent. He emphasized that they would not “blow up the base” and added that any assistance would be strategic and targeted.

The Brazilian private sector is on edge, too. Business leaders worry about how quickly new trade routes and buyers can be secured, especially for highly spatially regulated products such as aircraft or processed foods. Some of the crisis’s next steps could depend on how effectively Soybean Brazil’s diplomatic strategy can ramp up contacts with the US in the next days to prevent a trade conflict.

Lula tells Brazil to keep cool in tariff battle

The Brazilian President Lula Da Silva made it clear with a firm, down-to-earth sense. He warned that the country would retaliate if the tariffs were imposed, but he also said he did not want to start fights where they were unnecessary.

Lula repeated last week at a public event in São Paulo that the state’s sovereignty and economy must be preserved. Should the other side enforce tariffs, he warned, the country will react — but it will always do so in a manner loyal to its values and relationships across the globe.

His new finance minister repeated President Haddad’s statement that Brazil would not attack US businesses operating on its territory.

He also stressed that Brazil’s policy would be based on principle and not provocation; for Brazil, it is not retaliation that it seeks or wants, but fair trade.

Now the Aug. 1 deadline looms heavily. Brazil has a lot on the line. Should discussions continue at an impasse, Latin America’s largest economy must adapt at a corporate level to a new trade landscape that might ravage its commercial alliances and industrial strategies months from now.

Brazil is holding the line, waiting, watching, and preparing for now.

KEY Difference Wire helps crypto brands break through and dominate headlines fast