The Brazilian government has sent to the US government a letter proposing formal negotiation on trade tariffs, Geraldo Alckmin, Brazilian Minister of Development, Industry, Trade and Services announced on July 16.

The letter dated July 15 has been sent following “very productive” recent meetings between ministers and representatives of Brazilian industrial sectors including steel, aluminum, aircraft, automotive, equipment, agriculture and footwear, Alckmin told reporters.

Brazil now hopes to send a committee representing various ministries and industrial sectors to the US for overall tariff negotiations. Representatives of Brazilian industries also expect to hold meetings with their US counterparts, including company CEOs, traders, import, export and trade bodies, which could result in additional, specific trade accords between companies, Alckmin said.

The Brazilian government’s decision to attempt to negotiate a trade accord, or accords, with the US, one of its largest trade partners, may replace the recent suggestion by President Luiz Inácio Lula da Silva to impose reciprocal tariffs on US goods imported into Brazil.

US President Donald Trump announced plans on July 9 to impose a 50% tariff on all Brazilian products entering the US effective Aug. 1, apparently linking this decision to his displeasure with what he described as a”witch-hunt” against former Brazilian President Jair Bolsonaro, who is currently standing trial in Brazil, accused of an attempted coup against the current government.

Following Trump’s announcement, Brazil formally enacted a new decree on July 15, legalizing the imposition of identical reciprocal tariffs on trade with other nations. This law was approved by Brazil’s Congress earlier this year.

The July 15 letter was sent by Brazil’s Minister Alckmin and Foreign Affairs Minister Mauro Vieira, to Howard Lutnick, US commerce secretary and Jamieson Greer, US trade representative, Brazil’s development, industry, trade and services ministry (MDIC) said. It was received early July 16 but no reply has yet been given, MDIC said.

The letter expressed Brazil’s indignation at the suggested 50% import tariffs, regretted the harm this could do to mutually important trade partners, noted that the US has an ample trade surplus with Brazil and proposed negotiation in certain areas which have not yet been publicly disclosed, to find mutual solutions, the ministry said.

Josue Gomes da Silva, president of Sao Paulo state industries’ federation FIESP, told reporters he was “absolutely confident” on the possibility of an accord, possibly by Aug. 31 or at the latest within 90 days.

Aluminum and steel

Janaina Donas, executive president of Brazilian aluminum association Abal, who participated in the July 15 ministerial meeting, said the unilateral measures proposed by the US government against the Brazilian industry go further than merely commercial issues and could disrupt investments in Brazil’s aluminum chain, impacting global supply chains. The US is dependent on Brazilian aluminum raw materials, she noted.

Steel semis and coal trades were highlighted as sectors where Brazil and the US are interdependent. However, it’s unclear if steel was specifically mentioned in the formal letter to the US government authorities as a priority for negotiation, due to the confidential nature of parts of the letter, a Brazilian Steel Institute Aco Brasil spokesperson said.

All steel and aluminum imports entering the US are already subject to 50% tariffs following a previous Trump administration decree.

The US Chamber of Commerce in Brazil (Amcham Brasil) released a statement expressing it supports negotiation and reviewing the US’ proposed tariffs, Alckmin added.

“More than 6,500 small businesses in the United States depend on products imported from Brazil, while 3,900 US companies have investments in that country. Brazil is among the top ten markets for US exports and receives approximately $60 billion in US goods and services each year. A stable and productive trade relationship between the two largest economies in the Americas benefits consumers, sustains jobs, and promotes prosperity in both countries,” Amcham Brasil said in a July 15 statement published on its website.
Source: Platts