The recent measures taken by US President Donald Trump regarding imported products from other countries are a wake-up call for Brazil. This is because the government may experience positive or negative future impacts from the trade war imposed by the Republican.
Initially, Trump threatened to impose tariffs on products coming from Canada, Mexico, and China, but then postponed the tariffs against neighboring countries, keeping the trade war, for now, only with China. Trump imposed a 10% tariff on the Asian country for allegedly failing to stem the unauthorized flow of immigrants and drugs into the United States. China reacted by imposing a 15% tax on coal and Liquefied Natural Gas (LNG) and a 10% tax on crude oil, agricultural equipment, and some cars imported from the US.
According to Fernando Brancoli, professor of International Relations at the Federal University of Rio de Janeiro (UFRJ, in Portuguese), Trump knows that the tariff war could harm the United States itself, but something bigger is behind it.
“It seems that Trump's big point concerns are more performative moves. What do I mean by that? Although these tariffs may, in the medium term, generate an increase in inflation or even a drop in total employment in the United States, he argues that these tariffs aim to punish countries that would be benefiting too much from the United States. He would be ensuring that companies return to build factories in the US, so there's a bit of a two-faced game here,” argues the professor.
“Yes, it could harm the United States, but in a way, it is articulated and placed within more explicit moves to protect this point. In the medium term, those who will suffer the most are weaker countries, those with less capacity to act. In this context, Mexico, or even Canada, along with other nations globally could suffer more from these tariffs.”
Brazil, in the middle of the tariff war
In this scenario, Brancoli explains that Trump has been '"elatively calm" about the tariffs imposed on the Chinese. The head of the US is more threatening towards the nations closest to him. The researcher also says that Brazil could gain or lose a lot amid this new tariff policy.
“Incredibly, Trump has been much more aggressive with countries and regions that would initially be US allies, such as the European Union, Mexico, and Canada, even though he has gone back on his tariff promises against Mexico and Canada. In China, there were 10% tariff increases, and their response was also somewhat localized. It seems to me that Trump is testing, trying to understand more or less to what extent he can move,” explains the expert.
In the Brazilian case, the UFRJ professor observes two ways of looking at this type of movement. "On the one hand, there is the argument that Brazil can benefit to some extent from this tariff war when, for example, US oil becomes more expensive for the Chinese, leading them to seek alternatives like Brazilian oil or other Brazilian products to by the higher costs."
“But there's another perspective that suggests Brazil typically thrives in a more stable international environment, without tariff wars or major issues. This is because Brazil can suffer, as we've seen over the past few months, with rising commodity prices leading to increased food prices worldwide. Brazil could even find itself in the crossfire of these disputes. We'll need to monitor this over the next few months. A much more chaotic, much more complicated world [could] end up dragging us into it, raising interest rates, increasing inflation, and impacting on the lives of the population,” he says of the possibilities.
Bizarre statements on purpose
Brancoli points out that we need to understand, based on the books written by the President of the United States, that his most absurd statements are usually deliberate and shouldn't be taken too seriously. There are other strategies.
"For a long time, to understand international relations, we relied on international relations textbooks. Nowadays, you need to read the books Trump wrote about business and similar topics. He mentioned that the best way to do business is to shoot your goals into the stratosphere, making odd, bizarre requests that no one would ever accept, and then try to scale them down to a more specific level. It's what we in Brazil would call creating an artificial problem to make the original issues seem less complicated when negotiating."
"Following this logic, we can imagine that Trump's seemingly absurd statements, like invading the Panama Canal or buying Greenland from Denmark, are more about setting a baseline for debate and negotiation rather than actual plans. Initially, we believe he won't buy or invade Greenland, but establishing such unusual and peculiar benchmarks that, when he negotiates something like a military agreement with Denmark, the will be quite different," Brancoli explains.
"But of course, in this context, we're talking about the president of the world's largest military power. Given that, it could indeed have a huge impact. We're monitoring the market, and the world is reacting with significant concern to this kind of move."
Brancoli finished by commenting on the statement about the United States taking control of the Gaza Strip."Once again, we have to keep up with the fact that Trump is an expert in making outlandish statements and often backtracking on them."
