Brazil Responds to US Tariffs with $5.5B Relief Package for Businesses
In response to the recent 50% surtax on Brazilian products imposed by the United States, President Luiz Inácio Lula da Silva announced on Tuesday (12) a new federal relief package of R$ 30 billion (approximately $5.5 billion) intended to support impacted businesses.
Tariff Impact and Brazil's Response
The punitive tariffs were introduced by President Donald Trump as retaliation against countries he claimed had 'looted' and 'plundered' the United States through trade. The impact was felt immediately, as Brazil's green coffee exports decreased by 28.1% in July compared to the same month last year.
The new aid package, dubbed 'Sovereign Brazil,' offers a lifeline to businesses heavily reliant on exports. Dario Durigan, the executive secretary of the Ministry of Finance, stated that the government will request authorization from the National Congress to exclude actions taken against the tariff war from the fiscal target.
Mixed Reactions from the Business Community
While some sectors of the Brazilian economy have praised the support plan, others have deemed it insufficient, calling for more diplomatic efforts against Trump's tariffs and new measures to address the situation.
President Lula also declared, If the United States doesn't want to buy from us, we'll sell to others,
signaling a commercial offensive to seek new markets in response to the tariffs.
Fiscal Implications and Uncertainty
The government's decision to exclude expenses related to the aid package from the fiscal accounts has raised concerns about budget overspending, despite assurances that the budget remains within limits.
Despite the financial strain, President Lula maintains his government is willing to negotiate, stating that the move is supposed to create new things
out of the crisis. However, the cost of unpredictability appears in the plan against the tariff cap, and the government agrees on launching a package to aid companies that are accumulating losses due to the 50% tariff.
Conclusion
As the tariff war continues, the government's response but remains a subject of debate within Brazil. Businesses are feeling the brunt of the economic impact, and while the relief package offers some assistance, the future remains uncertain. Despite the challenges, President Lula remains committed to negotiating with the United States while seeking new markets for Brazilian products.