Tariff hike hits Brazil’s industrial exports in Q3

In the third quarter of 2025, Brazil’s total manufactured-goods exports to the United States fell 14.5% from the same period in 2024, the steepest drop since the pandemic. In addition to market-driven factors, such as the overall decline in Brazilian exports of petroleum products, the downturn was driven by the tariff hikes imposed by U.S. President Donald Trump.

The U.S. result contrasts with Brazil’s overall industrial export performance, which grew 2.4% from July to September compared with the same period a year earlier. Excluding the United States, shipments of manufactured goods increased 5.9%.

Among the four OECD-based technological-intensity categories used to classify industrial goods, two drove the decline in exports to the U.S. in the third quarter: medium-technology goods, down 23.6%, and medium-low-technology goods, down 16.5%.

The data come from a survey by the Institute for Industrial Development Studies (IEDI). According to the study, the category most affected by the U.S. tariff policy was medium-low-technology goods, which accounted for 36.8% of Brazil’s exports to the U.S. from January through September.

Medium-low-technology products include apparel, leather, and footwear; wood goods and furniture; food products; metal products; and petroleum products and biofuels. Rafael Cagnin, IEDI’s chief economist, noted that many items in this category were included among the newly exempt products in the tariff decision announced on November 20. That improves the outlook for the group, he said. However, because the U.S. decision came so late in the year, any normalization in shipments may only start to appear at the end of 2025, with more visible effects expected in 2026.

Cagnin pointed out that medium-low-technology goods not only concentrated the tariff impact but were also among the categories whose exports to the U.S. had been outperforming sales to the rest of the world earlier in the year, before the 50% tariff took effect in August.

Exports of medium-low-technology goods to the U.S. rose 20.6% in the first quarter and 8.2% in the second. In the third quarter, they fell 16.5%. Even so, from January to September, they still posted a 2.9% increase. Shipments to the rest of the world fell in all three quarters: 2.1% in the first, 3.9% in the second, and 0.6% in the third. For the year through September, exports to other markets were down 1.6%.

The study shows that, in the third quarter, the drop in medium-low-technology shipments to the U.S. accounted for 76% of the total decline in exports of that category to all destinations. In bilateral trade, the group still posted a surplus, but its third-quarter balance was only 13% of the surplus recorded a year earlier.

In the medium-technology category, exports to the U.S. fell 23.6% in the third quarter. The decline was steep, though Cagnin noted that this group had already shown volatility even before the tariff action. Within the category, metallurgy and miscellaneous goods posted declines of 30.2% and 24.9%, respectively. Taken together, medium- and medium-low-technology goods accounted for 63% of the total decline in Brazilian manufactured-goods exports to the U.S. from July to September, the study said.

In medium-high-technology goods, exports to the U.S. dropped 7.6%, driven by automobiles. The group comprising motor vehicles, trailers, and bodies fell 23.9% in the period.

The performance in sales to the U.S. contrasts sharply with exports to other markets. Shipments of medium-high-technology goods to the rest of the world grew 19.2% from July to September. Despite the decline in sales to the U.S., stronger demand elsewhere more than compensated, Cagnin said.

“The United States is not a major destination for many of these products.” He also noted that Argentina’s economic stabilization helped boost Brazil’s automobile exports to its Mercosur partner this year.

High-technology goods were the only category to record growth, a 4% increase in exports to the U.S. in the third quarter. In the first two quarters, shipments in this category rose 13.9% and 15.5%, respectively. “High-tech goods were largely shielded. Export growth to the U.S. slowed, but the comparison base is high. And shipments increased both to the U.S. and to the rest of the world.”

Aircraft make up the most significant export within the high-technology category, Cagnin noted, and they were “effectively shielded” from the tariff since July. Exports of this group to other markets rose 21.2% in the third quarter compared with a year earlier.

Source: Valor International

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