Brazil’s Low-Value Imports Recover in Q2, Raising Concerns for Retail and Textile Sectors

After a period of sharp decline, low-value international purchases showed signs of gradual recovery in the second quarter. Although still below the peaks seen before the implementation of taxation measures, the rebound in this type of trade has raised concerns for Brazilian retail and the domestic textile industry.

According to a Santander report based on Federal Revenue data, sales under the Remessa Conforme program totaled R$3.77 billion from April to June — a 21% increase over the previous quarter, marking the first growth since October 2024. Compared to the same period last year, however, revenue fell 11%.

“This acceleration can be partially explained by consumers bringing forward purchases in anticipation of the interstate ICMS tax hike on international orders,” wrote analysts led by Ruben Couto. This resulted in a lower comparison base for the first quarter.

The total number of parcels from April to June reached 36.7 million, still 29% below the peak of 51.7 million recorded in Q2 2024. Quarter-over-quarter, the volume increased by 13%, accompanied by a 7% rise in average ticket size. According to Santander’s team, the figures indicate “normalization and growth” in international demand.

The report notes it is too early to say that the gradual recovery of Remessa Conforme poses a serious threat to Brazilian retailers. Data is not published by the company, making it difficult to assess specific impacts, and volumes remain well below pre-taxation levels.

Fernando Pimentel, executive director of the Brazilian Textile and Apparel Industry Association (ABIT), argued, “No one is against imports, as long as they occur under the proper parameters that should govern international trade.”

According to Pimentel, the tax on international purchases up to US$50 — widely known as the “blusinhas tax” — has curbed the import surge but has not fully balanced the market. “Here we pay 90% in taxes, while foreign players pay 45%. That undermines local producers’ competitiveness,” he said.

Beyond small parcels, Abit data show that imports have been rising across the entire value chain, putting pressure on the domestic industry. In the 12 months ending in May, Brazil’s textile production grew 8.5%, while imports surged 20.5%.

“Apparel has suffered more because imports rose 19.3% in the 12 months through June — nearly five times the pace of domestic production [4.3%],” Pimentel said. This includes purchases under the conventional import regime, which accounts for most of the industry’s foreign buying.

Pimentel added that this situation is not new, but has worsened with the rise in trade tensions between the United States and China. “When the U.S. cuts imports from China — the world’s largest exporter — those products have to go somewhere, and Brazil is an option,” he said. China currently accounts for 60% of Brazil’s apparel imports.

Regarding U.S. President Donald Trump’s recent announcement to raise tariffs on Brazilian products to 50%, Pimentel said the measure “virtually renders Brazilian exports unfeasible.” For the textile sector, sales to the U.S. represent only 4% of total industry revenue. On the other hand, there are effects for companies that import goods from the U.S., such as the SBF Group, owner of Centauro and Nike’s operator in Brazil, and for fashion retailers purchasing collections in dollars.

Pimentel attended a meeting on Tuesday (15) between industry representatives and the federal government, where they requested a delay in the implementation of the tariff, set to begin August 1 if no agreement is reached. The group also opposed retaliatory tariffs from Brazil, citing the Economic Reciprocity Law.

Despite the challenges, the sector is expected to end the year in positive territory. Abit forecasts 2.6% growth for the textile and apparel industry in 2025, in line with the country’s GDP outlook. From January to May, textile production increased by 11.8%, apparel production rose by 1.6%, and apparel retail sales grew by 5.4%.

Source: Valor Econômico

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