Can Brazil Benefit from President Trump's Trade Policy?
Brazil finds itself in a unique position at the start of the new U.S. administration. The world’s most closed economy among middle income countries, Brazil is also a rare case of a nation that runs a trade deficit with the United States. Will Brazil take the steps necessary to benefit from the new dynamic created by the Trump government’s economic nationalism?
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President Donald Trump’s announcement of the U.S. withdrawal from the Trans-Pacific Partnership (TPP) on Monday, January 23—his first full business day at the White House—was greeted with a sense of relief in Brazil. Government officials and commentators saw in the American president’s decision “opportunities" for Brazil to end its growing, self-imposed trade isolation, which was the result of the protectionist posture of the Lula-Rousseff governments and aggravated by the country’s loss of international competitiveness during that period.
The demise of the TPP certainly spares Brazil from losing market share in several of the twelve countries that negotiated the agreement, especially for agricultural products. Had the TTP entered into force, for instance, competitors in the signatory countries would likely have displaced Brazilian poultry exports to Japan. Officials in the Temer government have also expressed hope that the end of the TPP will open new trade and investments opportunities for Brazil in South America, Mexico and Asia. These comments are in line with plans to pursue the economic policy reforms needed for the country to overcome its worst recession ever and find a path back to sustainable growth, yet some observers worry actual action to improve Brazil’s trade stance may prove elusive.
Facing record levels of unemployment and a presidential election next year amidst a global wave of populism, will Brazil take the steps necessary to benefit from the new dynamic created by the Trump government’s economic nationalism?
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João Augusto de Castro Neves
Director, Latin America, Eurasia Group
The Brazil Institute—the only country-specific policy institution focused on Brazil in Washington—works to foster understanding of Brazil’s complex reality and to support more consequential relations between Brazilian and U.S. institutions in all sectors. The Brazil Institute plays this role by producing independent research and programs that bridge the gap between scholarship and policy, and by serving as a crossroads for leading policymakers, scholars and private sector representatives who are committed to addressing Brazil’s challenges and opportunities. Read more
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