Production sector suffers more damage from tariffs, says expert

The impact of American tariffs on the Brazilian productive sector is at the center of an analysis carried out by José Pimenta, columnist for CNN Money, in an interview with the WW program.

According to him, the most worrying issue is not the political clash between Flávio Bolsonaro (PL) and Luiz Inácio Lula da Silva (PT), but rather the concrete effects that new US tariffs could have on production chains built over decades.

José Pimenta highlighted that it is very difficult to separate trade negotiations from the current political context. He noted that when Lula gained a popularity boost through a sovereignty speech last year, that move resonated internationally.

"When you had Lula's turn in terms of an increase in popularity due to a specific speech about sovereignty last year, you had a concrete increase and obviously this was reverberated in the polls and got there in different parts of the world", he stated.

The columnist also highlighted that, just a few months before an election, any decision that comes from the United States tends to be politically instrumentalized. "The speech, the narrative will be used by both the situation and the opposition", said Pimenta.

Production chains at risk
For José Pimenta, the most damaging aspect of the debate goes beyond politics. He warned that sectors facing a 25% tariff - and possibly more than 30%, in the event of a broader investigation - will have serious difficulties exporting to the United States.

"The effect on the production sector, on the production chains that were built over the last 40 years, is an important point to be highlighted", he stated.

Among the sectors mentioned are instant coffee, wood, furniture, machinery and equipment - all part of chains that, according to him, "feed the productive sector daily, business to business, which reaches the North American consumer".

Pimenta also warned that American consumers themselves would be affected, suffering inflationary pass-through in a scenario in which inflation is already considered strong in the United States in some segments.

"What is most damaging for those who experience international trade on a daily basis are these high-level chains that were built in addition and that can now suffer an extensive setback", he concluded.

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Source: CNN