The 'Trump plan': how Brazilian companies try to circumvent tariffs and reduce dependence on the USA

Search for new markets comes up against costs and global competition The back and forth of American tariffs has caused enormous instability for the export sectors since last year. See the tariff chronology. According to the executive president of the Brazilian Footwear Industry Association (Abicalçados), Haroldo Ferreira, many companies that still had financial strength last year were able to negotiate with their importers and share the cost of the additional tariff. “But this strategy started to become more difficult this year with the new round of tariffs”, he says. Sectors affected by the new tariffs are meeting with government representatives to present the main demands of each segment and discuss support measures. Still, some are concerned about the financial effects of the new tariffs and argue that diplomatic negotiation to reduce or remove the rate remains the best alternative. This is the case, for example, in the furniture sector. According to Cândida Cervieri, executive director of the Brazilian Association of Furniture Industries (Abimóvel), around 30% of exports in the segment are destined for the USA. “We have already faced a very large impact in industrial hubs in São Paulo, Santa Catarina, Rio Grande do Sul, Paraná and Minas Gerais, which registered a strong wave of layoffs”, says the executive, reiterating the estimate of around 10 thousand layoffs since last year. Cervieri points out that, although companies are seeking new markets, this strategy takes time to produce results. "There is a whole process of building trust between trading partners, and each market has its own characteristics. Furthermore, the whole world is dealing with the tariffs imposed by Trump and looking for new markets, which increases global competition", he adds. Shoes on a production line at Brazilian footwear manufacturer Kissol, amid the imposition of new American tariffs on several Brazilian products, including the footwear industry, which has the USA as its main foreign market. Joel Silva/Reuters What the industry asks the government to face tariffs Industry representatives highlight the importance of maintaining diplomatic dialogue with the American government and with Brazilian interlocutors who work in the USA. This discussion also involves the possible application of the Economic Reciprocity Law, which allows the Brazilian government to adopt response measures against countries or economic blocs that impose commercial, legal or political barriers to Brazil. "We need to keep the doors open for dialogue and continue negotiating. It is necessary to recognize that the US trade policy is unfair, but this is the current scenario. We need to find points of convergence to seek a favorable solution for both sides", says the superintendent director of the Brazilian Association of the Textile and Apparel Industry (Abit), Fernando Pimentel. In addition to the negotiations, several sectors of the economy have already presented proposals to the government to strengthen Brazilian industry in the face of the new tariffs. On Tuesday, for example, the executive president of the Brazilian Association of Machinery and Equipment Industry (Abimaq), José Velloso, met with the vice-president of the Republic, Geraldo Alckmin, to discuss emergency measures aimed at preserving the competitiveness of Brazilian exports. Among other points, the sector proposed: strengthening Reintegra, a program that returns part of the taxes paid throughout the production chain to exporters; an export premium credit, which would generate tax credits to offset taxes; and the adoption of a special federal tax deferral regime, allowing companies more time to pay taxes. “Another challenge that we discussed with the government is the adoption of complementary measures that use the instruments already provided for in the legislation to contain the advance of imports”, says Ferreira, from Abicalçados. According to the executives, the domestic market, seen as an alternative to offset part of the losses in exports, faces strong competition from imported products. According to Pimentel, from Abit, imports grew this year, both in traditional trade, carried out via containers, and in purchases made through international e-commerce platforms, known as small orders. "We have to seek ever greater internationalization, but we also need to face the Brazil cost and other factors that still hinder the growth of national companies. We need to find a balance in this process", he concludes. Understand the new tariffs announced by the USA Last week, the American government confirmed the application of an additional 25% tariff on Brazilian products after concluding a trade investigation conducted by the Office of the United States Trade Representative (USTR). The measure, however, counts