The new definitions imposed by the United States, announced by Donald Trump on Wednesday (2), will have a significant impact on the Brazilian industry of machinery and equipment, and Jose Feloso, CEO of the Brazilian machinery and equipment industry (ABIMAQ) warned.
Although Brazil was included in the 10 % tariff list, which is more moderate compared to other countries, Velloso indicates two main problems for the sector:
Loss of competitiveness in the United States of America
The United States is the largest destination for Brazilian exports of machinery and equipment, which represents 7 % of the sector’s revenue.
With the new fare, Brazilian products will be 10 % less competitive than American competitors.
Increase competition in the local market
The second problem, which is more serious, is possible commerce. Countries like China, Japan, Korea and European countries, which will face Higher rates in the United States of AmericaYou will search for new markets for their products, and intensify competition in Brazil.
Velloso notes that in 2023, even with the decrease in machine consumption by 0.2 % in Brazil, imports from China grew by 34 %. The participation of Brazilian manufacturers in the local market has decreased from 60 % to 54 % throughout the year.
The executive also mentions the increase in input costs, especially steel, as a factor that weakens the competitiveness of the national industry last year.
Regarding possible solutions, Velloso praises the rapid action of the Brazilian government to search for negotiations with the United States. He argues that Brazil adopts a “customs tariff climbing” policy, with a progressive tariff according to the level of products processing, with the aim of encouraging the collection of value in the country.
“We have to gain value in Brazil, generate value in Brazil and manufacture our raw materials in Brazil,” Feloso says, with a focus on the importance of diplomatic negotiations to alleviate the effects of new definitions.