New pricing could impact a third of Brazilian exports, says CNI

If the new 25% tariffs proposed by the USTR (United States Trade Representative) at the beginning of this month come into force, a third of Brazilian exports will be impacted by rates of 37.5%, according to projections made by the CNI (National Confederation of Industry).

This number represents 27.5 percentage points more than the current tariff of 10%. The remainder of exports, around 3.6%, would increase by 2.5% compared to the current rate.

A few weeks ago, the US trade office proposed an additional 25% tariff on Brazilian products, except for goods that qualify as "subject to national security tariffs".

The agency says it has determined that the Brazilian government's policies on digital commerce, certain tariffs and illegal deforestation are subject to legal action under so-called Section 301 of the Act - a trade policy tool that allows Americans to investigate and retaliate against other nations for trade practices considered unfair.

Simultaneously, an investigation into forced labor in almost 90 countries was concluded, with Brazil present among the nations investigated. According to the USTR, these countries do not adopt or effectively apply restrictions on the import of goods produced with forced labor.

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In this case, the proposal is to apply an additional fee of 12.5%. When both measures affect Brazilian exported products, the total additional tariff can reach 37.5%.

"The possible imposition of new tariffs does not benefit either side. They would increase costs for companies, reduce competitiveness and create uncertainty for investments. The most efficient path is dialogue", says Ricardo Alban, president of the CNI.

The confederation also raised the main products that will be impacted if the two tariffs come into force. Check it out:

5 products that may be impacted by a 37.5% tariff

- Unalloyed pig iron;
- Cane sugar in solid form;
- Inedible tallow;
- Undenatured ethyl alcohol;
- Pine pattern wooden frames.

5 products that may be impacted by a 12.5% tariff

- Iron ore and concentrates, agglomerated pellets;
- Quartzite slabs;
- Essential oils from orange citrus fruits;
- Silicon;
- Chemical wood pulp, sulfate or soda, dissolution grades.

However, it is worth noting that the proposed tariffs do not come into force automatically. On July 6th and 7th, the American trade office will hold public hearings on the two investigations to discuss the measures and receive contributions from companies, entities and governments, in order to seek a solution before the fees are officially applied.

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Source: CNN