Brazilian states rush to adopt relief measures after U.S. tariff surge

In 16 Brazilian states most affected by the decline in exports hit by the U.S. tariff surge in August and September, 12 adopted state-level support measures for exporters. The impact varied widely: shipments of tariff-targeted products fell between 8.9% and 99.9%. Of the 16 most affected states, 14 also saw a drop in their total exports to the United States.

The study considered the most affected to be those states most dependent on the U.S. market, where at least 5% of exports go to the United States. Paraíba, Amapá, and Ceará are also in this group, but exports of products hit by the tariff hike actually rose in August and September compared with the same months last year — by 4.7%, 14.7% and 155.3%, respectively.

Across all 26 states and the Federal District, more than half — 15 in total — announced measures to mitigate the effects of the tariffs: Alagoas, Bahia, Ceará, Espírito Santo, Goiás, Minas Gerais, Paraná, Pernambuco, Piauí, Rio de Janeiro, Rio Grande do Norte, Rio Grande do Sul, São Paulo, Santa Catarina, and Sergipe.

Even with those actions, some states recorded drops of more than 50% in total exports to the U.S. between August and September of 2024 and the same period in 2025, such as Alagoas (-59.9%), Rio Grande do Norte (-63.7%), and Pernambuco (-72.7%). Among the most U.S.-dependent states, only five registered growth in overall shipments to the American market.

In São Paulo’s exports to the U.S., there was a 16.8% decline in tariffed products and a 14.7% decline in exempt products. Total exports amounted to US$2 billion in 2025, US$377.6 million less than in 2024.

To cushion the blow, the state launched the “Giro Exportador” credit line, with more than R$40 million already approved and disbursed, and another R$317 million under review. The state also released R$1.5 billion in ICMS tax credits as an additional measure.

According to Ricardo Britto, CEO of Desenvolve-SP, the initiative gives exporters breathing room: “It is working capital for companies that often have frozen capital for export operations and need to ensure payment of suppliers and workers.”

In Espírito Santo, about R$60 million in credit was made available to exporters affected by the tariff hike, said Development Secretary Rogério Salume. He explained that some items, such as quartzite, were exempt, but others, such as semi-finished steel products and coffee, were affected. “Even if the product is exempt today, it may not be tomorrow,” he said.

FGV Ibre researcher Flávio Ataliba argues that affected sectors need to rethink their export strategies, diversifying both their products and trade partners. He says the tariff hike is a warning signal for industries overly concentrated in a few markets, especially the U.S.

In Paraná, ten products were hit by the tariffs. The most affected sector was timber, present in 266 municipalities and responsible for up to 80% of jobs in some regions. The tariffs led to US$65.4 million in losses from canceled contracts between August and September, according to the state’s industry federation (Fiep).

The federation’s superintendent, João Arthur Mohr, explained that Paraná’s timber market is heavily customized for the U.S., which has disrupted local economies. Three companies are at risk and have halted production lines. “The state cannot shift this product to other markets, and it may take longer to place timber domestically,” he said.

Companies — which together employ 4,000 people — have implemented layoffs, collective vacations, and temporary suspensions (lay-offs) for training. The state government announced measures, including tax exemptions and subsidized credit lines.

A crisis committee was created, mainly due to the timber sector’s severe exposure. Mohr believes the measures are merely palliative, protecting cash flow but insufficient to offset heavy losses. He argues that a quick renegotiation of tariffs is needed, with a reduction from 50% to the 10–15% range, similar to Chile and some European countries, which “would be essential to avoid destroying the market.”

He says that if negotiations are concluded within 30 to 60 days, Paraná could resume exports to the U.S. in December.

Ataliba notes that the case of Paraná illustrates how Brazil’s dependence on a small number of export destinations creates vulnerabilities for regional economies. Even with mitigation efforts, states continue to rely on conservative trade strategies, making it harder to recover recent losses.

Source: Valor Econômico

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