United States and Brazil discussion tariff exclusions for Embraer aircrafts and food products
Brazil is currently engaged in a diplomatic and trade conflict with the United States, following the imposition of a 50% tariff on many Brazilian exports by the Trump administration. The tariffs, effective from August 1, are a response to actions perceived as threats to U.S. national security.
The tariffs affect a variety of products, including Embraer aircraft, but with some key exceptions. Orange juice, a significant export for Brazil, has been explicitly exempted from these tariffs. The status of coffee and other food exports remains unclear, but if subjected to tariffs, it could lead to increased costs and reduced imports.
Embraer aircraft, a significant Brazilian aerospace export, is likely to face a significant negative impact due to the 50% tariff. This could lead to reduced demand and disrupt Embraer's business in the U.S. market, with potential ripple effects on supply chains and job markets linked with aerospace exports from Brazil.
On the other hand, the exemption of orange juice from tariffs means Brazil can continue exporting this product to the U.S. without the punitive 50% cost increase, maintaining market stability for orange juice.
The Brazilian government, led by President Lula, is actively negotiating with American authorities to exclude certain products from the tariffs. Vice President and Minister Geraldo Alckmin has been in constant dialogue with US Commerce Secretary Howard Lutnick to discuss the issue. The Finance Minister, Fernando Haddad, has also stated that Brazil will not leave the negotiating table.
The overall design of the plan to protect exporting companies was concluded by the technical team last week and awaits Lula's approval. The Brazilian government has stated that it will not make any political concessions related to the tariffs, including the legal issue of former President Jair Bolsonaro or any other judicial decision.
The U.S. embassy chargé d'affaires, Gabriel Escobar, stated that the American government is interested in critical materials on Brazilian soil. The Brazilian government is considering excluding aircraft manufactured by Embraer, which has the North American market as its main buyer for regional aviation, from the surcharge due to the company's imports from the U.S.
In summary, the tariffs imposed by the U.S. on certain Brazilian products, including foods and aircraft, are causing significant concern for Brazilian exporters. The Brazilian government is actively negotiating with American authorities to exclude certain products from the tariffs, with the aim of minimising the economic impact on Brazilian businesses and consumers.
| Product Category | Tariff Status | Impact | |---------------------|----------------------------------|-------------------------------------------------------| | Embraer aircraft | Likely subject to 50% tariff (not exempted) | Strong negative impact on sales to U.S. customers | | Orange Juice | Exempt from tariffs | No direct tariff impact; markets stable | | Coffee and other food | Unclear from current sources | If subject to tariffs, would increase costs and reduce imports |
- The Brazilian government is actively negotiating with American authorities to exclude certain products from the tariffs, with Embraer aircraft being one of the significant Brazilian exports under consideration.
- The exemption of orange juice from tariffs means Brazil can maintain market stability for this product, while the status of coffee and other food exports remains uncertain, potentially leading to increased costs and reduced imports.
