US 50% Tariff Plans Trigger Brazilian Chemical Export Cancellations, GDP Job Loss Risks

Brazil is facing significant economic challenges due to U.S. President Donald Trump's threat to impose 50% tariffs on Brazilian exports starting August 1. The tariffs jeopardize up to 120,000 jobs and could reduce the economy of the state of Sao Paulo by 2.7%, according to Governor Tarcisio de Freitas. Brazilian chemical exporters, which sent $2.4 billion worth of products to the U.S. last year, are experiencing widespread contract cancellations, particularly in resins and compounds used in fertilizers, affecting related sectors such as agriculture, manufacturing, and food processing. Industries like plywood and orange juice, which rely on chemical preservatives and account for a large share of exports to the U.S., are also seeing order reductions. The chemical sector, which runs a $7.9 billion trade deficit with the U.S., views the tariffs as unjustified, and efforts to negotiate a resolution have stalled since May. Additionally, the political implications of the tariffs are notable, as they have boosted the popularity of Brazil's leftist President Luiz Inacio Lula da Silva ahead of elections, complicating the political landscape.