Brazilian Exports Hit Record Despite U.S. Tariffs, but Small Businesses Remain Under Pressure

India, China and Europe helped drive Brazil’s trade surplus during the first eight months of this year. Through August, Brazil exported $23 billion more than in the same period of 2025, according to the Brazilian Trade and Investment Promotion Agency (ApexBrasil).

The record shows how far Brazilian export diversification has progressed since the United States imposed higher tariffs, according to ApexBrasil President Laudemir Müller. “Of the 2,400 companies that exported to the U.S. in May 2025, 78% were already exporting to other markets by June of this year,” he said.

The United States is Brazil’s second-largest trading partner, behind China. Argentina ranks third, closely followed by India, which Müller said has been a standout export market this year. Brazilian exports to India increased by $3.6 billion from January through August, a period in which sales to the United States fell by $2.6 billion. “Twenty years ago, India was Brazil’s 40th-largest destination; in August 2026, it became the fourth-largest, with exports of $1.5 billion during the month, putting it on par with Argentina,” he said.

Brazil’s trade surplus with China was $10 billion. Müller said, however, that the biggest improvement came from Europe, where Brazil’s trade balance swung from an $885 million deficit from January through August last year to a $5 billion surplus over the same period in 2026. “Of that total, $4 billion came between May and August, immediately after the Mercosur-European Union (EU) trade agreement was signed,” he said.

India is buying more copper and manufactured goods, while the EU is opening up opportunities for Brazilian aircraft and engines. Brazil’s efforts to diversify its export markets have also extended to Africa, particularly South Africa, Angola, Ethiopia and Nigeria.

Brazilian Export Diversification Expands, but Small Businesses Still Face Pressure

“But some companies continue to suffer from the effects of higher tariffs,” Müller said, pointing to textiles, footwear and furniture as the sectors facing the greatest difficulties. These industries produce goods tailored to U.S. consumers and also face intense global competition.

In August, ApexBrasil launched its Export Diversification Plan, with R$210 million in funding to support 5,300 companies affected by the tariff increases. Of those, 1,600 are already receiving assistance. The initiative aims to provide market intelligence tools, trade promotion, access to qualified buyers and specialized support, broadening the options available to companies seeking new export markets.

Companies will have the opportunity, for example, to participate in trade fairs in Canada, Mexico, Central America, the Caribbean and the Bahamas. The agency will cover the cost of a basic exhibition booth, with support capped at $8,000 per company, from September this year through August 2027.

Economist Lia Valls, an associate researcher at FGV Ibre and professor at Rio de Janeiro State University (UERJ), said the U.S. restrictions have affected Brazilian companies in different ways. “Large companies have a greater ability to redirect exports to other markets because they already have established networks of suppliers and buyers,” she said. “But small and medium-sized companies, especially in customized manufacturing sectors such as footwear and wood products, have been hit the hardest.”

“There is no way to reduce costs enough to offset the tariff,” she said, noting that even in agribusiness, which was less affected by the tariff increases because of U.S. dependence on certain products, some segments remain subject to the duties.

“Seafood companies are having difficulty finding alternatives,” Valls said. She considers the Mercosur-EU agreement important for increasing investment and supporting the diversification of Brazilian exports, particularly in manufacturing and the energy transition.

In the footwear industry, just over 90% of companies are micro and small businesses. This year, exports fell 17% in value, the worst result since the pandemic, according to the Brazilian Footwear Industries Association (Abicalçados).

According to a Datamar overview, containerized footwear exports fell 13.7% compared with the first seven months of the previous year. See more details below:

Footwear Exports | Jan 2023 – Jul 2026 | TEUs

Source: DataLiner (click here to request a demo)

Valls stressed that the biggest problem created by Donald Trump goes beyond the tariffs themselves and lies in the uncertainty they create for foreign trade operations. “This is an activity that requires planning and a long-term view, while Trump brings uncertainty and unpredictability. Companies need to be prepared for abrupt changes in the rules.”

For engineer Marcos Jank, coordinator of the Insper Agro Global center, the world is undergoing a complete paradigm shift. “The rules of 20th-century international trade — with economic blocs, multilateralism and rules governed by the World Trade Organization — have been buried. The current environment is one of direct, case-by-case and asymmetric negotiation with the United States,” he said. “There is no one left to turn to.”

Jank said that in agribusiness, Brazil successfully pursued a strategy of demonstrating how essential its products are to the U.S. economy. “For the sectors that remain affected, the country should negotiate on a case-by-case basis, showing how much Americans stand to lose. Otherwise, Brazil could be forced to make concessions in non-trade areas, such as politics, rules for Big Tech companies and rare-earth mining.”

According to data from the Ministry of Development, Industry, Trade and Services, Brazilian exports grew in 15 of the country’s main markets in the first half of 2026 compared with the same period in 2025: China (22%); the Netherlands (4%); Mexico (19%); Singapore (29%); Canada (8%); Chile (13%); Germany (20%); India (88%); Italy (17%); Japan (13%); Turkey (28%); Indonesia (4%); Vietnam (17%); the United Kingdom (15%); and Paraguay (11%).

Müller said the tariff increases have led to a global geopolitical realignment, with other affected countries taking a closer look at Brazil and, in turn, strengthening trade ties. For him, Brazilian export diversification does not mean abandoning the U.S. market. “Brazilian business leaders do not want to replace the U.S. market; they want to diversify. Everyone hopes this sudden and unjustified increase in tariffs will come to an end.”

Source: Valor Econômico

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