Proposed tariffs threaten Brazil's economic growth and exports

On July 14, 2025, Brazil's economy faces significant threats from proposed tariffs of 50% by the United States, as stated by various Brazilian economists and consulting firms. These tariffs could lead to a gross domestic product (GDP) reduction of between 0.3 and 0.8 percentage points by the end of 2025. According to estimates from the agribusiness firm FGVAgro, Brazil's annual export losses could reach between $12 billion and $17 billion, constituting 3.6% to 5% of the nation's total exports, heavily impacting key sectors such as agriculture, which holds a crucial share of exports to the U.S. market. The domestic consumption in Brazil is also expected to decline significantly, estimated at a loss of up to $13 billion. The immediate effects of these tariffs may also be felt in the agricultural sector, which accounts for about 30% of exports heading to the U.S., affecting commodities like coffee and orange juice, essential to Brazil’s economy. Moreover, industries such as steel and aluminum, already facing tariffs, could find exports to the U.S. unviable due to the newly proposed levies. Business organizations in Brazil, including the National Confederation of Industry, are advocating for diplomatic solutions to avoid a trade war that would be detrimental to both the U.S. and Brazilian economies. The American Chamber of Commerce for Brazil has also voiced concerns, highlighting that trade wars yield no winners and create investment uncertainties that hinder economic growth. They are calling for efforts to maintain a stable trading environment to preserve the fruitful trade relationship that sees Brazil exporting approximately $41 billion annually to the U.S., which represents roughly 1.7% of Brazil's GDP. As Brazil grapples with these challenges, the government has promised to introduce measures aimed at moderating the impact of the tariffs. This includes establishing a committee led by Vice President Geraldo Alckmin to engage with business leaders across affected sectors. Their objective will be to develop counter-proposals and strategies to better navigate the brewing crisis. A decree is projected to be issued soon, outlining legal and technical frameworks for potential countermeasures, should the tariffs take effect on the initially proposed date of August 1, 2025.