Brazilian government announces a $5.5 billion package to counteract Trump’s tariffs
Writing and reporting by Camila Gutiérrez
The President of Brazil, Luiz Inácio “Lula” da Silva, launched the ‘Sovereign Brazil Plan’, a set of measures and initiatives aimed at offsetting the economic impacts of the 50 percent tariff imposed on the Latin American country by the U.S.
The plan has three pillars: strengthening production, protecting workers, and emphasizing multilateral trade diplomacy. These initiatives are designed to protect Brazilian exporters, help them retain jobs in strategic industries, and ensure the country's continuous economic development.
The government will invest $5.5 billion to provide credits at affordable rates, strengthen financial support, allow the temporary waiver of taxes for exporters, and facilitate the purchase of foods by government agencies.
The Brazilian horticultural sector reacts
The Association of Brazilian Fruit Producers and Exporters (Abrafrutas) said that even though Lula’s plan is positive, the set of initiatives as presented doesn’t fully consider the current reality of the Brazilian horticultural supply chain.
"The small grower that sells their production to large exporting companies runs the risk of being left helpless with this contingency plan, given the tools the government announced prioritize the direct exporter," the entity warned.
"Without any measures that effectively reach the production base, we run the risk of falling sales as well as jeopardizing our income and the permanence of these growers in the fields," it added.
Abrafrutas said it will continue to work firmly and proactively with the Federal Government and National Congress, so that, in addition to the announced emergency credits and incentives, diplomatic efforts to totally withdraw the U.S. levy on Brazilian fruit, are intensified.
The goal is for solutions to reach the entire supply chain in the industry, from small farmers to large producers, so that Brazil can maintain its privileged position as one of the world’s leading suppliers of fresh, high-quality produce.
Among the fruits Brazil exports to the U.S. are table grapes and mangoes. The country also supplies orange juice, a product that is now exempt from the 50 percent tariff.
Orange juice: exempted but still impacted
Even if Brazil managed to get orange juice out of the list of products impacted by President Trump’s tariffs, the National Association of Citrus Juice Exporters (CitrusBR) said the sector expects around $538 million in losses.
Through a press release, CitrusBR stated that these projections are in response to the fact that exporting citrus byproducts, such as inputs for the beverage and cosmetics industries, has become unprofitable due to a 50 percent tax. During the latest harvest, these byproducts generated around $177.8 million in profit.
"A lot of these products depend on ingredients such as citric cells and essential oils responsible for aroma, and these supplies are levied at 50 percent, which makes the operation impossible," said Ibiapaba Netto, executive director of CitrusBR.
In addition to these losses, there’s the impact of the 10 percent tariffs still affecting orange juice exports, which represents an extra estimated loss of $103.6 million, according to data from Brazil’s Federal Secretary of Foreign Trade.
In the U.S., nearly 58 percent of all juice consumption corresponds to reconstituted juice, a concentrate with 66 percent solid particles that, upon importation, is diluted with water to reach a natural proportion of 12 percent, according to the organization.
Essential oils are also key inputs in the cosmetics industry, as they add citrus notes to perfumes.
"It can be a strong impact for those sectors, and even though orange juice has been exempted, the hit is significant, mainly in a challenging market context such as this year’s," reiterated Netto.
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