São Paulo – The import tariffs announced in early April by the president of the United States, Donald Trump, will likely encourage and fast-track free trade agreements, including ones involving Mercosur, the customs union comprising Brazil, Argentina, Paraguay, and Uruguay. On the other hand, consulting firm BMJ Consultores Associados partner Welber Barral believes trade between Brazil and the Arab countries would only benefit if one of these countries decided to retaliate against the United States, which is unlikely.
“The United States are practically 25% of global trade, so you have a very big impact around the world. Basically, it increases protectionism, it increases instability and, of course, it really damages the United States’ reliability as a trade partner,” says Barral.
In the specialist’s assessment, a new round of free trade agreements may take place as a means of finding routes with lesser or no taxes on goods affected by Trump’s decisions. “The United States’ actions have prompted several countries to look for commercial alternatives and resume seeking free trade agreements, so this is a chance for the Mercosur-European Union agreement to move forward. There is an expectation that the Mercosur-(United) Arab Emirates will conclude shortly, and also, countries like Canada and Mexico are interested in an agreement with Mercosur once again,” he says, referencing an agreement being discussed with the UAE.
Trump imposed a 10% tax on incoming goods from any country to the US. Additionally, a higher tax will be charged from some countries. Arab countries being levied this higher rate are Algeria (30%), Tunisia (28%), Libya (31%), Iraq (39%), Syria (41%), and Jordan (20%). On the other hand, the base tax will not be levied on all goods. There will be tax breaks and even exemptions in some cases. Oil and oil products, for instance, may benefit from lower taxes.
The tariff hike was announced by the White House on April 2. A week later, Trump said he would keep tariffs at 10% for 90 days, with the exception of China, on which a 125% tax was levied on that occasion. Tariffs on China, which retaliated against the US, went up to 145% in the days that followed. Since then, the United States and the countries impacted by the measures are negotiating their next steps as it pertains to trade.
Translated by Gabriel Pomerancblum
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