US tariff overthrows values in the Brazilian market

Beef loses strength, coffee backs down and bitter orange devaluation even before the new American tariff comes into force

While the United States government has not officially applied the new tariffs on Brazilian products, the effects are already being felt on the Brazilian wholesale shelves. With the announcement of raising the import rate from 10% to 50% from August 1, strategic sectors of national agriculture are living a scenario of instability and drop in price, especially in the commercialization of commodities for the US market.

The beef, one of the main pillars of Brazilian export, has been the most affected so far. According to data from the Center for Advanced Studies in Applied Economics (CEPEA), linked to the USP Luiz de Queiroz Higher School of Agriculture, the price of the dollar -quoted cattle has already accumulated a drop of 8.05% in July alone. Yesterday, July 23, the arroba was negotiated at US $ 53.20, well below the US $ 58 at the beginning of the month. The devaluation, although anticipated, reflects the caution of international buyers and the retraction in the flow of business in the face of the highest cost prospects for American importers.

Orange also felt the impact. The 40.8 pound box, delivered to processors for juice, saw its dollar value drop 5% in July. It went from $ 8 to $ 7.60 in the last business closure. The sector, which already faces climate and productivity challenges in some producing regions, now needs to deal with additional pressure from the foreign market. With Brazil being the world’s largest exporter of orange juice, any change in US market access conditions has a direct reflection on producers’ income.

Coffee, especially the Arabica type – the most consumed in the United States – also went into a fall trajectory. Until yesterday, the retreat accumulated in the month was 4.18%. The robust, less consumed in the US but with a strong presence in other markets, recorded an even more pronounced drop: 11.41%. CEPEA highlights in its monthly report that “the US announcement of import tariff from 10% to 50% from August 1 has increased uncertainties in the global coffee sector. This abrupt change increases instability in Brazil, a global leader in air exports, and influences abroad prices”.

It is important to remember that Brazil is responsible for about one third of all the coffee consumed in the United States. Meanwhile, countries like Colombia, the second largest supplier in the US market with 20% of imports, are still exempt from tariffs. Already Vietnam, a major exporter of Robusta, faces a rate of 20% – well below the new rate scheduled for Brazil. This difference creates a competitive imbalance that worries producers and sector analysts.

It draws attention, however, the contrast between what happens here and what is seen on the other side of the continent. While prices fall into the Brazilian wholesale, in the United States consumers face exactly the opposite: high in consumer prices. CPI data (CPI) recently released that items such as ground beef, orange and coffee rose in the US even before the tariff announcement.

In June, ground beef up 1.4%, accumulating 9% increase in the year. Some economists are already beginning to point out meat as the “new egg” in American inflation – a direct reference to the strong readjustment that eggs have suffered in recent months because of avian flu. Orange rose 4.4% in June compared to May, and coffee for domestic consumption was up 2.2% in the same period.

Interestingly, these highs occurred even before the announcement on July 9 of the new tariff policy. Now, with tariffs about to come into force, US prices are expected to continue rising, which can further increase the cost of living of Americans. On the other hand, Brazilian producers, who depend strongly on the US market, can see their compressed income, even with stable internal demand.

The moment requires extra attention of all links in the production chain. While the Brazilian government seeks diplomatic alternatives and new markets, producers face difficult decisions: hold production, diversify destinations or accept lower prices in a scenario of uncertainty. What was once a distant expectation has now become an economic reality – and Brazil begins to pay the price even before the fare is actually valid.

Trump justifies 50% tariff with political narrative, but data reveals contradiction in protectionist discourse

While Brazilian producers feel in their pockets the first effects of Donald Trump’s decision to impose 50% tariffs on all Brazilian products from August 1, the US president himself presents himself as a victim of an alleged “persecution” of Brazil-a narrative that, when confronted with concrete data, seems more like a move of political pressure than an objective analysis of trade relations between the two countries.

During an event in Washington on Thursday night (23), Trump stated that the tariffs were applied to countries with which the relationship “has not been good” without mentioning names, but making it clear that Brazil is in the group of punished with the highest tax. “In some cases, it is 50% because the relationship has not been good with these countries. So we just said, ‘They will pay 50’. And that’s it,” he said, with the characteristic tone of confrontation that marked his government.

What is noteworthy, however, is the justification presented by Trump for such a drastic increase: accusations of censorship made by the Brazilian Supreme Court against social media platforms in the US. In a letter published on July 9, the US president said Brazil would have issued “hundreds of secret and illegal censorship orders” against companies such as X (former Twitter), threatening them with millionaire fines and expulsion from the Brazilian market. For him, this would represent a “violation of the freedom of expression of Americans.”

He also took advantage of the letter to attack President Lula and reinforce his support for Jair Bolsonaro, whom he called the victim of a “witch hunt” in Brazil. The clearly political tone mixes legal, commercial and ideological themes in a strategy that many analysts see as another electoral maneuver – Trump seeks to position themselves as a defender of press freedom and the “ordinary man” against governments he considers authoritarian, even if the facts tell another story.

The problem is that the numbers show a very different reality from that painted by Trump. Despite stating that commercial relationship with Brazil is “unfair” and “far from reciprocal”, official data from the Ministry of Development, Industry, Commerce and Services have revealed that Brazil has a persistent commercial deficit with the United States for 16 years – since 2009. During this period, the negative balance has exceeded $ 88.61 billion, the equivalent of about $ 484 billion in the current price. In other words: the US sells much more to Brazil than they buy from it.

If the relationship were so unbalanced in favor of Brazil, as Trump implies, it would be difficult to explain this scenario. The American country is one of the largest supplies of capital goods, airplanes, cars, pharmaceutical products and technology for Brazil. Already Brazilian exports to the US, although important – especially in meat, coffee, orange juice, sugar and ore – do not come close to imported volume.

In addition, the claim that Brazil would be censoring American platforms with “secret orders” was also denied by experts in digital law and transparency. Although controversial STF decisions are public, they are available in official judiciary systems and follow legal procedures. Many of them were taken in response to disinformation, attacks on democratic institutions and attempted coup of January 8, 2023-events that, incidentally, had Trump’s explicit support to former President Bolsonaro.

In practice, what is seen is a US president using his economic influence to punish a country that does not bow to his political pressures, under the disguise of “defense of freedom.” The measure, however, can go out through the culathra. While Brazil loses space in the US market, US consumers will be able to pay more for products such as coffee, orange juice and meat-items that are already on the rise in US retail, as shown in CPI data.

Experts warn that Trump’s aggressive protectionism, far from strengthening the American economy, tends to destabilize global productive chains and generate retaliation. The Brazilian government, in turn, has already started diplomatic articulations and evaluates responses, including the possibility of taking the case to the World Trade Organization (WTO). President Lula, who has already called Trump a “emperor of the world”, stresses that Brazil will not accept blackmail.

What is at stake goes beyond numbers and tariffs. It is a shock between two models: one based on dialogue, multilateralism and international rules; and another, driven by unilateral and rhetorical impositions of confrontation. And while Brazilian producers feel the weight of the decision, the world watches a resistance test of the global commercial order – and a reminder that, often, commercial wars start with words, but end on the consumer dish.

With information from G1 and CNN.