Trump’s Tariff Hike Is Not Bad, but Brazil Faces Risks Regarding China, Analysts Say

Experts consulted by Valor affirm that the impact of the tariff hike announced by U.S. President Donald Trump on Wednesday (April 2) should not be considered solely based on the minimum 10% tariff on imports from Brazil. Some expressed specific concerns about a possible “Chinese invasion” of the Brazilian market, with products originally destined for the U.S. being redirected.

Economists point out that other factors, such as the reaction of other countries that faced much higher tariffs, possible negotiations with the U.S., and the effects of the new rates on relative prices, could impact Brazil’s trade relations. A U.S.-China deal, for example, could affect Brazilian exports of soybeans and meat.

Check the chart below for the main products exported from Brazil to the United States in the first month of 2025. The data is from DataLiner:

Main Products Exported from Brazil to the U.S. – Jan 2025 – TEU

Source: DataLiner (click here to request a demo)

A Negotiation Strategy

For Livio Ribeiro, a partner at BRCG and a researcher at the Brazilian Institute of Economics of the Getulio Vargas Foundation (FGV Ibre), everything is part of a strategy to “push for negotiations.” “What concerns me, in fact, is that we do not know everyone’s willingness to negotiate,“ he said. Although there is still much “confusion,“ he explains that Trump announced a universal 10% tariff for Brazil. However, some economies, such as the European Union and China, which have the most significant trade deficits with the U.S., will face much higher tariffs.

Ribeiro warns against the idea that a 10% tariff on Brazil and a 34% tariff on China could give Brazilian products an advantage in the U.S. market. “What really matters is the movement of all relative prices. We are at the beginning of the process, not the end. The ability to absorb the tariffs varies greatly.”

Lia Valls, a researcher at FGV Ibre and a professor at Rio de Janeiro State University (UERJ), believes it is too soon to say that 10% is a low tariff. Among the products Brazil exports to the U.S., oil and airplanes face zero tariffs. “Aircraft have high added value. A 10% increase makes a big difference in the price of a plane,“ she points out. “But I believe there will be negotiations for these products. Embraer, for example, has a factory in the United States, which should lead to discussions.”

Valls believes that Trump aimed to hurt Asia more, with higher tariffs imposed on countries in that region.

Global Trade Impacts

Trump’s decision to impose a 34% tariff on Chinese products entering the U.S. is expected to cause secondary effects on global trade, which could significantly impact Brazil, says Matias Spektor, professor and vice-director of the FGV School of International Relations in São Paulo. As the American market becomes less accessible to China, Chinese manufacturers are likely to seek new markets for their low-cost products, with Brazil being one of the potential targets.

“One of the biggest problems for Brazil now will be the flood of products from other countries that can’t enter the U.S. and will spread worldwide. The main concern, obviously, is with Chinese products, as China has significant leverage over Brazil,“ he told Valor.

“Since Brazil is highly dependent on China—about 30% of Brazilian exports go there—China has enormous political leverage over us,“ he said. “The unintended effect of the new U.S. tariffs will be a more tense trade relationship between Brazil and China.“

Spektor notes that the U.S. decision to place Brazil in the least affected countries, with only a 10% tariff, is favorable. However, the rate will still impact many Brazilian exporters whose products enter the U.S. at lower tariffs.

Mixed Reactions from Brazilian Economists and Industries

According to Silvio Campos Neto, an economist at Tendências Consultoria, Trump’s announcement has two positive aspects. First, the U.S. did not adopt a universal tariff—there were speculations of a 20% tariff for all trading partners. Second, Brazil received the lowest tariff rate of 10%.

“It’s somewhat of a relief, but the fact that many countries received much higher tariffs—including key trading partners like the European Union, Japan, and China—suggests that Trump’s announcement is just the starting point for U.S. negotiations with the entire world,“ he said. He added that Brazil must continue persuading U.S. authorities about the harmful effects of tariffs and the complementary nature of some industries, such as steel.

“The lowest rate of 10% was applied, similar to Argentina, a government ideologically closer to Trump’s,“ the economist noted. “The Brazilian government has been cautious, showing a willingness to negotiate, according to statements from the vice president.”

However, in the medium term, he warns that costs and prices could rise if high tariffs persist.

The Brazilian footwear industry sees a potential opportunity. According to Abicalçados, the Brazilian Footwear Industry Association, the 10% tariff on Brazilian products, combined with higher tariffs on Asian countries, might create business openings. Haroldo Ferreira, CEO of Abicalçados, explained that the average tariff on Brazilian footwear in the U.S. is already 17.3%. “Since the new rate is 10%, it might not affect us much,“ he said. The tariffs on Brazilian footwear in the U.S. currently range from 0% to 48%.

Luis Otávio de Souza Leal, chief economist at G5 Partners, believes the U.S. measure was milder than expected. “I think they went easier on us since Brazil has a trade surplus with the U.S.,“ he said. “Even ethanol, a competitive product between the two countries that faces pressure for higher tariffs from the American agribusiness sector, wasn’t enough to raise the tariff rate on Brazil.”

Although it is unclear how the tariffs will be applied, Sandra Rios, director of the Center for Studies on Integration and Development (Cindes) and senior fellow at Cebri, says a lower rate for Brazil compared to China and the EU could increase Brazil’s competitiveness in the U.S. market.

A “Less Bad” Scenario

Welber Barral, a partner at BMJ and former Secretary of Foreign Trade, agrees that Brazil’s situation is “less bad“ than that of countries facing higher tariffs. However, he considers the tariff hike negative for the world economy—including the U.S.

“This is not good news for the world. It creates instability, drives inflation in the U.S., and could lead to higher interest rates. It also undermines international agreements and weakens multilateralism. The situation is unpredictable and discourages investment,“ Barral said, adding that the tariffs have already driven up U.S. market prices.

Political scientist Oliver Stuenkel, a professor at FGV, sees Trump’s announcement as “a new chapter in the breakdown of the international trade system built over the past decades”—perhaps the most dramatic one yet. He believes it is still too early to assess all the impacts, as many countries and companies will likely seek exemptions or negotiate better conditions.

For Ambassador Marcos Caramuru, an advisory board member at Cebri, Trump’s tariff measures do not align with the “spirit of global trade liberalization“ and reinforce the protectionist stance of his second term. He also argues that the tariffs, applied to entire countries rather than specific products or sectors, violate the most-favored-nation rule and create instability for businesses.

“In terms of trade rules, this is an even greater violation than previous ones. Trade relations have always been guided by the most-favored-nation principle, meaning that a tariff applied to one country must apply to all, with few exceptions. This announcement throws trade rules into turmoil,“ Caramuru said.

The Federation of Industries of Minas Gerais (Fiemg) stated in a note that the tariff hike is not positive for Brazil and needs to be analyzed in greater depth. “The impact will depend on how our direct competitors were affected,“ it said.

The Brazilian Machinery Builders’ Association (Abimaq) warned that “abrupt changes in import tariffs tend to create commercial and economic insecurity. This tariff hike could significantly negatively impact our economy and the Brazilian machinery and equipment industry.“

Trade lawyer Felipe Rainato states that Trump’s tariff calculations show “enormous arbitrariness“ and will likely be a key point in negotiations for affected nations.

Source: Globo Rural

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