Trump's tariff: Brazil will have 11 agricultural sectors at a hearing in the USA
On the eve of the USTR (Office of the United States Trade Representative) hearing to debate the Donald Trump administration's trade tariffs under section 301, the productive sector is fine-tuning the arguments it will take to Washington. The focus is on the economic impact to try to convince Americans that, with overtaxed Brazilian raw materials, inflation will weigh on the American pocket.
More than 70 Brazilians, including representatives of production chains, experts in diplomacy and economics, as well as politicians will be at the meeting scheduled by the USTR. Among the productive sector, there will be 11 representatives from Brazilian agriculture with the right to speak and 12 from American agriculture.
However, Brazil's agricultural sector is likely to enter into an arm wrestling match with some US sector entities. This is the case of the biofuels sector. The association of ethanol producers in the United States, the RFA (Renewable Fuels Association), defends the imposition of reciprocal tariffs on the grounds that there is an unfair commercial practice practiced by Brazil.
The entity commissioned a survey to show that renewable fuels gained strength among the American electorate amid the debate on energy security and the rise in gasoline prices. According to the survey, 74% of registered voters support the RFS - a federal program that requires the mixing of biofuels with fossil fuels -, the highest level of support recorded in a decade of quarterly surveys by the entity. Only 12% said they were against the policy.
The survey also indicates that 87% of respondents consider it important for the US to be energy independent, while 80% say that renewable fuels, such as ethanol, are relevant to achieving this goal. It is in this argument that the defense of reciprocal tariffs is embedded.
In RFA's assessment, the numbers reinforce the perception that domestically produced ethanol helps reduce the country's dependence on external energy sources, in addition to contributing to the rural economy and the supply of more affordable fuels.
According to the entity, US energy independence depends on strengthening the domestic sector. On the other hand, analysts argue that the US depends on purchases from abroad.
On the Brazilian side, sources linked to the debate say that there is a fear of American industry losing space due to the level of quality and competitiveness of items exported by Brazil. It's like that with the coffee industry.
Aguinaldo Lima, executive director of ABICS (Brazilian Association of the Soluble Coffee Industry) explained to CNN Agro that North Americans have already noticed changes in the coffee blends they sell due to the lack of Brazilian product and that any tax on the Brazilian item will result in an increase in the price of American coffee.
The USA was the largest buyer of Brazilian soluble coffee, but lost the position at the end of last year to Germany, "as tariffs on soluble coffee remained at 10%", stated Lima.
Among the meat segment, even if Brazil stops selling tariff-free to the US, meatpacking plants of Brazilian origin with industrial plants installed in Latin American neighbors will continue to supply the US at a time when the American herd is at its worst low in 70 years. Brazilian market analysts highlight that, indirectly, American consumers will continue to consume hamburgers that are related to the Brazilian product.
Itaú BBA highlighted in its latest reports that this commercial uncertainty combined with geopolitical instability makes the financing and flow of agricultural crops even more complex, while Brazil tries to avoid losses in other markets.
How the hearing will work
The hearing will debate different topics, in addition to agriculture. There will be 14 panels that start at 10 am Washington time (USA). Representatives of the sectors will have up to 5 minutes to present a type of executive summary to defend the chain they represent.
There may be questions sent by the USTR and time for a reply. However, according to sources interviewed by CNN Agro, the argument must be quick and focused on economic consequences if tariffs come into force.
The sectors had until July 1st to submit their arguments in writing, which will be the basis for reading and presentation next Monday (6).
See the agricultural representatives participating in the hearing
Andressa Silva - Brazilian Rice Industry Association
Vinicius Vanzella - Gelatin Manufacturers Association of South America
Marcelo Schunn Junqueira - Brazilian Rural Society
Fernanda Carneiro - Confederation of Agriculture and Livestock of Brazil
Marcos Matos - Brazilian Coffee Exporters Council
José Luiz Pimenta Junior - Brazilian Association of the Soluble Coffee Industry
João Marcelo Messas - Brazilian Association of Honey Exporters
Andrea Almeida - National Corn Ethanol Union
Welber Barral - Union of the Sugarcane and Bioenergy Industry and Brazilian Tree Industry
Gian Carlo Almeida Marodin - Brazilian Association of the Mechanically Processed Wood Industry
Source: CNN